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63) Which of the following is an external factor that affects pricing decisions in a company?
A) the company's overall marketing strategy
B) the nature of the market
C) the organizational objectives of the company
D) elements of the company's marketing mix
E) the annual advertising budget of rival firms
64) Which of the following is an internal factor that affects pricing decisions in a company?
A) the nature of the market
B) the degree of inflation in the economy
C) the overall marketing strategy of the company
D) the forces of demand and supply in the market
E) consumers' perception of value
65) Companies using target costing ________.
A) first design a new product and then determine its cost
B) tailor their products to be in line with the marketing mix
C) routinely neglect customer value considerations
D) avoid determining an ideal selling price until analyzing test market results
E) start with an ideal selling price and then target costs that will ensure that the price is met
66) Elmo Inc., a global conglomerate, designed the ElBrush, an electric toothbrush. Sensing
market demand for the electric toothbrush, Elmo started with an ideal selling price of $3 based
on customer value considerations and then targeted costs to ensure that the price was met. This
exemplifies ________.
A) competition-based pricing
B) cost-plus pricing
C) target costing
D) everyday low pricing
E) high-low pricing
67) PoolPak produces climate-control systems for large swimming pools. The company's
customers are more concerned about service support for maintaining their systems than the initial
price of the product. PoolPak specializes in and differentiates itself through both cutting-edge
technologies used to build its high-value climate control systems as well as seamless quality
service. PoolPak's prices are very high, but demand for its climate-control systems seems to be
forever on the rise. This exemplifies ________.
A) target costing
B) a pure monopoly
C) cost-plus pricing
D) a nonprice position
E) break-even pricing
68) RedFin, a company marketing deep-sea diving equipment, charges very high prices for its
products. Despite the availability of many low-priced products in the market, customers seem to
prefer RedFin, which has earned a reputation for selling high-quality products. This exemplifies
________.
A) a pure monopoly
B) an oligopoly
C) a nonprice position
D) break-even pricing
E) target costing
69) A decision to position the product on high-performance quality will mean that the ________.
A) seller must charge a higher price to cover higher costs
B) seller must charge a lower price to attract more customers
C) producer must step down production
D) marketer must boost derived demand in the market
E) break-even volume will be fairly low
70) Price setting is usually determined by ________ in small companies.
A) the top managers
B) the marketing department
C) the sales department
D) divisional managers
E) product managers
71) Price setting is usually determined by ________ in large companies.
A) the top managers
B) the external stakeholders
C) product managers
D) non-executive employees
E) the sales department
72) In industrial markets, ________ typically has the final say in setting the pricing objectives
and policies of a company.
A) the sales manager
B) top management
C) the production manager
D) the HR department
E) the sales staff
73) In industries in which pricing is a key factor, ________ often set the best prices or help
others in setting them.
A) sales departments
B) salespeople
C) production managers
D) line managers
E) pricing departments
74) Under ________, the market consists of many buyers and sellers trading in a uniform
commodity.
A) pure competition
B) monopolistic competition
C) oligopolistic competition
D) a pure monopoly
E) the dominant firm model
75) Which of the following exemplifies a pure competitive market?
A) a market where many buyers and sellers trade over a range of prices rather than a single
market price
B) a market where a single firm controls the larger fraction of the market share
C) a market where a few powerful firms control the larger fraction of the market share
D) a market characterized by only a few large sellers
E) a market where many buyers and sellers trade in a uniform commodity
76) Which of the following is true of a pure competitive market?
A) A single seller has a major effect on the current and future market price.
B) Companies spend significantly on marketing research and product development.
C) The advertising budget of companies is usually huge.
D) Sellers try to develop differentiated offers for different customer segments.
E) Sellers spend little time on marketing strategy.
77) In Viña del Mar, Chile, a large number of shops specialize in selling the same quality of
seafood products along the beach frequented by tourists. No individual shop dares charge more
than the going price without fearing loss of business to other shop-owners. This exemplifies
________.
A) pure competition
B) monopolistic competition
C) oligopolistic competition
D) pure monopoly
E) the dominant firm model
78) Under ________, the market consists of many buyers and sellers who trade over a range of
prices rather than a single market price.
A) pure competition
B) monopolistic competition
C) oligopolistic competition
D) a pure monopoly
E) the dominant firm model
79) Which of the following is true with regard to pure competition?
A) Under pure competition, no single buyer or seller has much effect on the going market price.
B) In a purely competitive market, marketing research is of utmost importance.
C) In a purely competitive market, product development is the focus of most firms.
D) Under pure competition, the market consists of many buyers and sellers who trade over a
range of prices rather than a single market price.
E) Under pure competition, the market consists of only a few large sellers.
80) The movie industry in a country is controlled by six large studios that receive 90 percent of
the annual revenues from movies. This is an example of a(n) ________.
A) pure competition
B) monopolistic competition
C) oligopolistic competition
D) pure monopoly
E) government monopoly
81) In which situation is the market dominated by one seller?
A) pure monopoly
B) monopolistic competition
C) oligopolistic competition
D) pure competition
E) free market
82) Under oligopolistic competition ________.
A) the market consists of a single dominant seller
B) the market consists of numerous small sellers
C) the market consists of many buyers and sellers who trade over a range of prices rather than a
single market price
D) sellers are typically unresponsive to competitors' pricing strategies and marketing moves
E) the market consists of only a few large sellers
83) Which of the following shows the number of units the market will buy in a given time
period, at different prices that might be charged?
A) demand curve
B) supply curve
C) learning curve
D) break-even pricing
E) target costing
84) Which of the following is true about the demand curve?
A) A demand curve indicates the drop in the average per-unit production cost that comes with
accumulated production experience.
B) A demand curve indicates the cost per unit of output in the long run.
C) A demand curve indicates the cost per unit of output in the short run.
D) In a monopoly, the demand curve does not indicate the total market demand resulting from
different prices.
E) A demand curve shows the number of units the market will buy in a given time period at
different prices that might be charged
85) Bruno Servers has decided to decrease its prices on its popular higher-range servers. The
company can reasonably expect ________ to increase.
A) fixed costs
B) variable costs
C) demand
D) additional value
E) overhead costs
86) ________ refers to a measure of the sensitivity of demand to changes in price.
A) Price elasticity
B) Cross-elasticity of demand
C) Elasticity of substitution
D) Marginal utility
E) Income elasticity of demand
87) If demand hardly changes with a small change in price, the demand is ________.
A) variable
B) inelastic
C) highly elastic
D) derived
E) negative
88) If demand changes greatly with a small change in price, the demand is ________.
A) variable
B) inelastic
C) derived
D) elastic
E) negative
89) Price elasticity of demand is represented by ________ divided by ________.
A) percentage change in quantity demanded; percent change in price
B) percentage change in units supplied; percentage change in price
C) percentage change in price; percentage change in quantity demanded
D) fixed costs; variable costs
E) cost-plus price; actual cost of production
90) When the price of a pack of Crispo potato wafers was increased from $4 to $5, the quantity
demanded by local retail stores went down by 50%. Hence, the price elasticity of demand for
Crispo is ________.
A) -2
B) 2
C) 4
D) -4
E) 0.5
91) There was a 35 percent increase in demand for a product after the seller decreased its price
by 14 percent. Therefore, the price elasticity of demand is ________.
A) 0.25
B) 0.4
C) -2.5
D) 2.5
E) -25
92) Buyers are less price sensitive when ________.
A) the product they are buying is of inferior quality
B) the product they are buying is low in prestige
C) substitute products are easy to find
D) the product they are buying is unique
E) the product they are buying is non-exclusive
93) ________, the more it pays for the seller to raise the price.
A) The less inelastic the demand
B) The less elastic the demand
C) The less the quality of tied services
D) The more the sensitivity toward small price changes
E) The more intense the competition
94) Dips in the economy and the instant price comparisons made possible by the Internet have
contributed to ________.
A) decreased consumer price sensitivity
B) increased consumer price sensitivity
C) a less direct relationship between supply and demand
D) low brand equity for luxury goods
E) decreased brand loyalty
95) In the aftermath of the Great Recession, consumers ________.
A) have become more value conscious
B) have become less value conscious
C) exhibit great interest in prestige pricing
D) show no interest in price cutting
E) rarely endorse value-for-money deals
96) When companies set prices, the government and social concerns are ________ affecting
pricing decisions.
A) external factors
B) internal factors
C) economic factors
D) cultural factors
E) organizational factors
Refer to the scenario below to answer the following questions.Alden Manufacturing produces
small kitchen appliances—blenders, hand mixers, and electric skillets—under the brand name
First Generation. Alden attempts to target newlyweds and first-time home buyers with this brand.
Considering that most young households have limited financial resources, Alden attempts to
engage in target costing. "In doing this," says Milt Alden, the co-founder of Alden Electronics,
"we have better control over keeping price right in line with customers."
Alden manufactures a three-speed blender, its top seller, along with a five-speed blender. The
hand mixers are manufactured in two variants—a small handheld mixer with two rotating beaters
and another that comes with an optional stand and an attached mixing bowl. Alden's
temperature-controlled skillets are manufactured in a single style with three color options.
"Our product offerings are narrower," Milt Alden added, "but our line workers know each
product like the back of their hands. This allows us to produce superior products while holding
our prices low.
97) Milt Alden says that his line workers "know each product like the back of their hands," and
that this knowledge helps the company keep its prices low. This indicates that Alden
Manufacturing most likely benefits from the ________.
A) cost-plus pricing
B) value-added pricing
C) experience curve
D) inelastic demand in the market
E) derived demand in the market
