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115) 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
116) DivetheBlue, 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 DivetheBlue, 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
117) 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
118) 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
119) Price setting is usually determined by ________ in large companies.
A) top managers
B) external stakeholders
C) product managers
D) non-executive employees
E) the sales department
120) 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
121) 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
122) Departments or managers that have an influence on pricing include sales managers,
finance managers, accountants, and ________.
A) engineering managers
B) human resources managers
C) production managers
D) customers
E) resellers
123) 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
124) 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
125) 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.
126) 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 shops. This exemplifies
________.
A) pure competition
B) monopolistic competition
C) oligopolistic competition
D) pure monopoly
E) the dominant firm model
127) 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
128) 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.
129) Which of the following is true with regard to monopolistic competition?
A) Under monopolistic competition, the market consists of many buyers and sellers who trade
at a single market price.
B) Under monopolistic competition, the market consists of only a few large sellers.
C) In a monopolistic market, little time is spent on marketing strategy.
D) Sellers can differentiate their products to buyers.
E) In a monopolistic market, price becomes a major competitive tool.
130) 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
131) 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
132) 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
133) 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
134) 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.
135) 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
136) ________ refers to a measure of the sensitivity of demand to changes in price.
A) Price elasticity
B) A demand curve
C) Price-value equation
D) Marginal utility
E) Income elasticity of demand
137) If demand hardly changes with a small change in price, the demand is ________.
A) variable
B) inelastic
C) highly elastic
D) derived
E) negative
138) If demand changes greatly with a small change in price, the demand is ________.
A) variable
B) inelastic
C) derived
D) elastic
E) negative
139) 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
140) In the aftermath of the Great Recession of 2008 to 2009, 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
141) Ways companies have avoided relying on price cuts in the new value-conscious era
include all of the following EXCEPT ________.
A) by adding more affordable product lines for the cost-conscious consumer
B) by redefining the "value" in their value propositions
C) by adding premium product lines for the higher end consumer
D) by offering deep discounts
E) by creating price tiers
142) When companies set prices, the government and social concerns are ________ factors
affecting pricing decisions.
A) external
B) internal
C) economic
D) cultural
E) organizational
Refer to the scenario below to answer the following question(s).
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.
143) Milt Alden uses which of the following strategies for pricing his products?
A) basing company price on competitors' prices
B) using everyday low pricing
C) initiating an aggressive promotional campaign
D) starting with customer-value considerations
E) focusing on overall fixed costs of manufacturing
144) If Milt Alden focuses on overall costs of manufacturing plus profit in setting product
prices, which strategy would he employ?
A) break-even pricing
B) competition-based pricing
C) value-added pricing
D) cost-plus pricing
E) good-value pricing
145) Internal factors affecting pricing include the company's overall marketing strategy,
objectives, and marketing mix.
146) Price decisions must be coordinated with product design, distribution, and promotion
decisions to form a consistent and effective integrated marketing mix program.
147) In a pure monopoly, the market consists of many buyers and sellers who trade over a
range of prices rather than a single market price.
148) A demand curve shows the number of units the market will buy in a given time period at
different prices that could be charged.
149) If a company faces competition, its demand at different prices will depend on whether
competitors' prices stay constant or change with the company's own prices.
150) If demand changes greatly with price, the demand is inelastic.
151) The more elastic the demand, the more it pays for the seller to raise the price.
152) If demand is elastic rather than inelastic, sellers will consider lowering their prices.
153) While lower prices may attract additional customers, it is possible for pricing strategies to
result in the product becoming a commodity in the customers' eyes.
154) Who typically sets prices in large and small companies?
155) What is a pure monopoly?
156) What are the different internal factors that affect a firm's pricing decisions?
157) Compare and contrast pure competition and oligopolistic competition.
158) Briefly discuss monopolistic competition.
159) What is a demand curve? Explain its importance in the context of pricing decisions.
160) Explain price elasticity. What determines the elasticity of demand?
161) Briefly describe how economic conditions impact a firm's pricing strategies.
162) "Beyond the market and the economy, the company must consider several other factors in
its external environment when setting prices." Explain this statement.
