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Figure 11-6a
230) In break-even chart in Figure 11-7a above, point A identifies the firm's ________ point.
A) loss
B) price
C) margin
D) profit
E) break-even
231) In the break-even chart in Figure 11-7a above, the wedge ABC represents the firm's
A) fixed costs.
B) break-even point.
C) loss.
D) profit.
E) total revenue.
232) In the break-even chart in Figure 11-7a above, the rectangular area EBCD represents the
firm's
A) fixed costs.
B) break-even point.
C) variable costs.
D) profit.
E) total revenue.
233) In the break-even chart in Figure 11-7a, the triangular area FBE represents the firm's
A) fixed costs.
B) break-even point.
C) variable costs.
D) profit.
E) total revenue.
234) In the break-even chart in Figure 11-7a above, the triangular area GAF represents the firm's
A) fixed costs.
B) break-even point.
C) variable costs.
D) profit.
E) total revenue.
235) In Figure 11-7a above, which is a break-even chart that depicts a graphic presentation of a
break-even analysis for a picture frame store, the area CGD represents the firm's
A) fixed costs.
B) break-even point.
C) variable costs.
D) profit.
E) total revenue.
236) Suppose you are the owner of a picture frame store and you wish to calculate how many
pictures you must sell to cover your fixed and variable costs at a given price. Demand for pictures
is strong, so the average price customers are willing to pay for each picture frame is $120. Also,
suppose your fixed costs (FC) total $32,000 (real estate taxes, interest on a bank loan, etc.) and unit
variable cost (UVC) for a picture frame is $40 (labor, glass, frame, and matting). What is the
quantity of picture frames you will need to sell to break-even?
A) 200 picture frames
B) 400 picture frames
C) 800 picture frames
D) 1,600 picture frames
E) 2,000 picture frames
237) Suppose you are the owner of a picture frame store and you wish to calculate how many
frames you must sell to cover your fixed and variable costs at a given price. Let's assume that the
demand for your frames is strong, so the average price customers are willing to pay for each
picture frame is $120. Also, suppose your fixed costs (FC) total $32,000 (real estate taxes, interest
on a bank loan, etc.) and unit variable cost (UVC) for a picture frame is $40 (labor, glass, frame,
and matting). If your picture frame store sold 2,000 picture frames, what would your profit (or
loss) be?
A) −$32,000
B) $0
C) $32,000
D) $112,000
E) $128,000
238) You are president of an electric appliance manufacturer. You want to reduce your break-even
quantity. All things being equal, you can do this by
A) increasing the quantity sold, while keeping price unchanged.
B) reducing marginal revenue.
C) reducing unit variable cost.
D) increasing fixed cost.
E) increasing total cost.
239) Assuming there is no change in a product's price or the quantity demanded, if a business
owner wants to increase her advertising expenses to $500 monthly, this would cause total costs to
________ and the break-even quantity to ________.
A) decrease; stay the same
B) increase; increase
C) decrease; increase
D) stay the same; increase
E) stay the same; decrease
240) While pricing objectives frequently reflect corporate goals, pricing constraints often relate to
A) stockholder demands.
B) political ideology.
C) conditions existing in the marketplace.
D) an organization's code of ethics.
E) the financial realities within the organization itself.
241) Specifying the role of price in an organization's marketing and strategic plans is referred to as
A) choosing a pricing plan.
B) defining a profit mission.
C) developing pricing constraints.
D) setting pricing objectives.
E) determining the list or quoted price.
242) Pricing objectives involve
A) reconciling the prices charged by an organization to the values set forth in its business mission.
B) taking specific steps to capitalize on an organization's internal strengths as they apply to price.
C) specifying the role of price in an organization's marketing and strategic plans.
D) taking specific steps to compensate for an organization's weaknesses as they apply to price.
E) subjectively setting intrinsic values to all products and services offered by an organization.
243) Which of the following statements regarding pricing objectives is most accurate?
A) Pricing objectives are similar to core values in that there is little to no change in them over time.
B) Pricing objectives may change depending on the segments in which a company is doing
business.
C) Pricing objectives may change depending upon the cost of advertising.
D) Pricing objectives are established exclusively by the marketing department.
E) Pricing objectives are extremely sensitive to even the slightest change in the local economy.
244) All of the following are examples of pricing objectives except which?
A) market share
B) survival
C) unit sales
D) social responsibility
E) product obsolescence
245) A firm's profit objective is often measured in terms of ROI. The acronym ROI stands for
A) risk opportunity investment.
B) revised organizational incentives.
C) return on investment.
D) regulated organizational investments.
E) replenishment of organizational inventories.
246) Three pricing objectives relate to a firm's profit. In one known as ________, a company gives
up immediate profit in exchange for achieving a higher market share in the hopes of penetrating
competitive markets.
A) maximizing current profit
B) target return
C) break-even strategy
D) minimizing risk
E) managing for long-run profits
130
247) Three different objectives relate to a firm's profit, which have different implications for
pricing strategy. The three profit-oriented objectives include ________, managing current profit,
and achieving a target return.
A) accumulating profits
B) managing for long-run profits
C) reinvesting profits
D) redistributing profits
E) maximizing gross margin
248) Managing for long-run profits as a pricing objective implies that a company will
A) give up immediate profit in exchange for achieving a higher market share in hopes of
penetrating competitive markets.
B) maintain a given price range to ensure there is no loss of customers over time, even if the profit
margin declines.
C) invest excess cash in bonds and certificates of deposit in order to counteract any inflationary
economic changes in the future.
D) reinvest all profits into market research or product research rather than returned to shareholders.
E) drop all products, product lines, or divisions that cannot maintain their pricing goals.
249) Three different objectives relate to a firm's profit. One objective, known as ________, is
common in many firms because the targets can be set and performance measured quickly.
A) managing for long-run profits
B) target return
C) break-even strategy
D) maximizing current profit
E) minimizing risk
250) A maximizing current profit pricing objective implies that a company chooses to
A) set targets for which performance can be measured quickly.
B) give up immediate profit in exchange for achieving a higher market share in hopes of
penetrating competitive markets.
C) set a profit goal that is often determined by its board of directors.
D) reduce investment in any further market or product research.
E) set prices based on return on sales.
251) Three different objectives relate to a firm's profit, which is often measured in terms of return
on investment. One objective, known as ________, occurs when a firm sets a profit goal, usually
determined by its board of directors.
A) maximizing current profit
B) managing for long-run profits
C) target return
D) break-even strategy
E) minimizing risk
252) A target return profit pricing objective implies that a company chooses to
A) set targets whose performance can be measured quickly.
B) give up immediate profit in exchange for achieving a higher market share in hopes of
penetrating competitive markets.
C) set a profit goal that is often determined by its board of directors.
D) reduce investment in any further market or product research.
E) set prices based on return on sales.
253) If a firm's profit is high enough for it to remain in business, a pricing objective may be to
________, which will in turn may lead to increases in market share and profit.
A) increase the commitment to social responsibility
B) increase dollar sales revenue
C) decrease unit volume while maintaining price
D) increase research and development funding for new product line extensions
E) continue with previous policies that seem to be working
254) Which of the following statements regarding sales goals is most accurate?
A) For marketing managers, sales revenue or unit sales can be easily translated into meaningful
targets for a product line or brand.
B) Cutting prices for a single product in a product line to raise unit sales often results in an increase
in sales for related products in the line.
C) Very often, cutting prices results in a decrease in market share.
D) Setting unit volume sales as a pricing objective results in price wars with competitors, so the
practice is limited to industries with few competitors.
E) An advantage of increasing unit volume sales is that it always results in an increase in profits.
255) The ratio of the firm's sales revenues or unit sales to those of the industry (competitors plus
the firm itself) is referred to as
A) target return on sales.
B) industry profit.
C) unit volume.
D) market share.
E) profit.
256) Market share is the ratio of the ________ to those of the industry, including the firm itself.
A) target return on sales
B) marginal profit of the firm
C) firm's sales revenues or unit sales
D) marketing expenses of the firm
E) profits of the firm
257) Companies often pursue a market share objective when
A) industry sales are flat or declining.
B) profits are increasing.
C) industry sales are beginning to rise.
D) there is a sudden increase in production costs.
E) stockholders are seeking higher dividends.
258) Which of the following statements regarding a market share pricing objective is most
accurate?
A) A market share objective is often difficult for product managers since stockholders are looking
for immediate dividends (return of profits).
B) Although increased market share is a primary goal of some firms, others see it as a means to
other ends, such as increased sales or profits.
C) Selecting market share as a pricing objective is particularly effective if industry sales are
growing.
D) An advantage of market share as a pricing objective is that it is particularly insensitive to
competitors' actions.
E) Ironically, a market share objective is realized by raising prices in order to increase consumer
confidence during the decline stage of a product's life cycle.
259) An online movie streaming service charges $14.99 per month for its basic package. However,
when a competitor introduced the same service at $13.99, the firm dropped its price to $13.99. The
firm most likely made this price reduction in an attempt to
A) decrease revenue but increase profit.
B) increase profit by increasing revenue.
C) maintain market share.
D) decrease market share.
E) increase efficiency.
260) If the CEO of the Clorox Co. were to say, "We want to control 60 percent of the bleach
market within the next five years," he would have set a ________ pricing objective.
A) profit
B) sales
C) unit volume
D) market share
E) social responsibility
261) Unit volume as a pricing objective refers to
A) the quantity of products to be produced or sold.
B) the ratio of price per unit to unit variable cost.
C) the ratio of production costs to the minimum sales price that would still generate profit.
D) the total quantity of product sold by a firm relative to the total quantity of product sold by all
firms in the industry.
E) variable cost expressed on a per unit basis for a product.
262) A negative aspect of selecting unit volume as a pricing objective is that
A) production often cannot keep up with demand.
B) there are increased carrying costs with extensive inventories.
C) if price reductions are used to achieve volume objectives, it can sometimes come at the expense
of profits.
D) it can create competition between divisions within the organization itself, causing conflicts
over the allocation of resources.
E) it always positively correlates with a sales revenue objective.
263) Some firms pursue a ________ pricing objective to generate cash to ward off bankruptcy.
A) market share
B) survival
C) sales revenue
D) single product line
E) profit
264) RadioShack, an electronics retail chain, couldn't compete with the prices offered by other
retailers. The company enacted price-matching programs and promoted large discounts on its
merchandise to raise cash and hopefully stave off bankruptcy. The best pricing objective at this
point for RadioShack most likely was
A) profit.
B) market share.
C) unit volume.
D) survival.
E) social responsibility.
265) A firm may forgo a higher profit on sales and follow which of the following pricing
objectives because it wants to recognize its stakeholder obligations?
A) profit
B) market share
C) unit volume
D) survival
E) social responsibility
266) Factors that limit the range of prices a firm may set are referred to as
A) pricing restraints.
B) pricing constraints.
C) demand factors.
D) pricing barriers.
E) pricing restrictions.
267) Pricing constraints are
A) barriers that must be overcome in order to set pricing objectives.
B) competitive pricing advantages one firm has over another.
C) different pricing strategies for each of the firm's products.
D) factors that limit the range of prices a firm may set.
E) barriers to entry a firm faces when launching a new product.
268) All of the following are examples of pricing constraints except which?
A) familiarity of the product
B) competitors' prices
C) newness of the product
D) break even point
E) demand for the product class, product, or brand
