156. Refer to Scenario 12.4. If BASF were to employ pricing that includes the price at the factory plus freight charges
from a chosen point nearest the buyer, this would be an example of ____ pricing.
a. factory plus
b. dispersion
c. F.O.B. destination
d. freight absorption
e. F.O.B. origin
157. Refer to Scenario 12.4. If BASF were to price its products in barrels from the factory, before it is loaded on the
carrier, this would be an example of ____ pricing.
a. buy-back allowance
b. geographic
c. F.O.B destination
d. F.O.B. origin
e. base-point
Chapter 12 – Pricing Concepts and Management
158. The eight stages of setting prices should always be followed if prices are to be set correctly.
a. True
b. False
159. The objective of profit maximization is rarely operational because its achievement is difficult to measure.
a. True
b. False
160. The objective of maintaining or increasing market share depends on growth in industry sales.
a. True
b. False
Chapter 12 – Pricing Concepts and Management
161. Price is a flexible ingredient in the marketing mix.
a. True
b. False
162. The major disadvantage of using price competition is that it takes a long time to implement the changes in price.
a. True
b. False
163. A seller can change prices quickly in a price competition situation.
a. True
b. False
Chapter 12 – Pricing Concepts and Management
164. A firm that competes on a price basis is unable to change prices frequently.
a. True
b. False
165. Price competition is a very flexible marketing strategy.
a. True
b. False
166. Non-price competition emphasizes distinctive product features, service, and product quality.
a. True
b. False
Chapter 12 – Pricing Concepts and Management
167. Non-price competition allows a company to increase its brand’s unit sales through means other than changing the
brand’s price.
a. True
b. False
168. Non-price competition can be used to establish brand loyalty.
a. True
b. False
169. Brand uniqueness is not important in non-price competition.
a. True
b. False
Chapter 12 – Pricing Concepts and Management
170. A firm can survive in the long run only if its products are sold below cost.
a. True
b. False
171. Marketers should set prices consistent with the firm’s marketing and overall objectives.
a. True
b. False
172. The importance of price depends on the type of product, the type of target market, and the purchase situation.
a. True
b. False
Chapter 12 – Pricing Concepts and Management
173. Knowing the target market’s evaluation of price allows the marketer to know how much emphasis to place on price
and how to price a product relative to competition.
a. True
b. False
174. A customer’s interpretation and response to a price depends on what the customer receives from a purchase
compared to what he or she gives up to make a purchase.
a. True
b. False
175. The role played by the attitude toward price in the overall evaluation of the marketing mix is a minor concern in
identifying the target market.
a. True
b. False
Chapter 12 – Pricing Concepts and Management
176. Demand depends only on the price of the product.
a. True
b. False
177. With prestige products, a firm will always be able to sell more at a lower price.
a. True
b. False
178. Prestige products tend to sell better at a high price than at a low price.
a. True
b. False
Chapter 12 – Pricing Concepts and Management
179. Changes in buyers’ attitudes, other components of the marketing mix, and uncontrollable environmental factors can
influence demand.
a. True
b. False
180. Price elasticity of demand measures the sensitivity of demand to changes in price.
a. True
b. False
181. Electricity is an example of a product that is price elastic.
a. True
b. False
Chapter 12 – Pricing Concepts and Management
182. Pricing decisions can be based on determining whether the demand for a product is price elastic or price inelastic.
a. True
b. False
183. If demand is elastic, a change in price causes a parallel change in total revenue.
a. True
b. False
184. Elastic demand is usually a result of the lack of substitute products.
a. True
b. False
Chapter 12 – Pricing Concepts and Management
185. Product demand usually becomes more elastic over time because more substitutes are found.
a. True
b. False
186. Factors affecting pricing decisions can include demand, distribution, and the way in which the product is promoted.
a. True
b. False
187. Profits for a firm are computed as follows: Profits = TR − FC.
a. True
b. False
Chapter 12 – Pricing Concepts and Management
188. Fixed costs vary with the number of units produced or sold.
a. True
b. False
189. Rent is usually a fixed cost.
a. True
b. False
190. Marginal revenue is the change in total revenue that occurs when a firm sells an additional unit of the product.
a. True
b.
False
b. False
Chapter 12 – Pricing Concepts and Management
191. Profit is the highest at the point where marginal revenue and marginal cost are equal.
a. True
b. False
192. The point at which marginal revenue equals marginal cost is the break-even point.
a. True
b. False
193. Knowing the number of units necessary to break even is important in setting the price.
a. True
b. False
Chapter 12 – Pricing Concepts and Management