269) Which of the following statements about consumer demand as a pricing constraint is most
accurate?
A) The price charged by competitors for similar offerings has little effect on the price a seller can
charge, usually only if there are very few potential buyers.
B) The number of potential buyers for the product affects the price a seller can charge, but only if
the product is using a push strategy in the channel.
C) The number of potential buyers for the product affects the price a seller can charge, but only if
the product is a necessity item.
D) The number of potential buyers for the brand affects the price a seller can charge in the growth
stage of a product life cycle, but not in the introductory stage.
E) The number of potential buyers generally affects the price a seller can charge.
270) Which of the following statements regarding pricing constraints is most accurate?
A) Generally, the greater the demand for a product, the higher the price that can be set.
B) At the corporate level, when setting pricing constraints, a firm must disregard current
conditions in the marketplace because they are too temporal for long-term planning.
C) Pricing constraints must always be set, but they are rarely enforced.
D) It is possible to create pricing constraints with the greatest range possible in order to anticipate
any and all changes in the marketing environment.
E) Even if a firm is trying to satisfy its obligations to its customers and society in general, it should
ignore setting pricing constraints.
271) The newer a product and the earlier it is in its life cycle,
A) the lower the price the firm must charge.
B) the more competition it has.
C) the higher is the price that can usually be charged.
D) the lower its production costs are.
E) the lower its unit variable cost is.
272) Which of the following statements about the product life cycle as a pricing constraint is most
accurate?
A) The newer a product is, the higher the price that can usually be charged.
B) The later in the product life cycle a product is, the higher the price that can usually be charged.
C) Once a product is considered nostalgic, the price will continue to rise indefinitely.
D) Fads will generally have only two price points—high and low—but the values of those price
points usually will be within 10 percent of each other.
E) Prices should not be changed until a product reaches its maturity stage.
273) Which of the following statements regarding pricing constraints is most accurate?
A) When a product is in the introductory stage of the product life cycle, the initial price must be
low since consumers don’t know what the product can do.
B) Patents and limited competition earlier in the life cycle mean that higher prices can usually be
charged for new products.
C) The greater the number of products in a company’s product line, the less the product features of
similar products can affect price.
D) The newest addition to a company’s product line should always have the highest price in order
to maintain the value of existing brands.
E) To avoid cannibalization, the newest product addition to a company’s product line should never
have a price lower than the other offerings in the line.
274) Which of the following statements is most accurate?
A) Nonprofit organizations are exempt from having to cover the costs of producing and/or
marketing their products.
B) Socially responsible corporations should have the pricing constraint of covering all costs of
producing and marketing their products, but they should not price their products to earn a profit.
C) Marketers must ensure that firms in their channels of distribution make an adequate profit or
they will be cut off from their customers.
D) Price elasticity of demand makes it virtually impossible for companies to cover all their
marketing and production costs at all times.
E) Marketing and production costs are the most difficult and expensive aspect of pricing because
they draw so much capital away from other departments in the organization.
275) Which of these is true about a pair of $200 designer denim jeans?
A) The manufacturer’s labor to make them comprises the largest percentage of the final price, with
other channel members clamoring over a mere 10 percent.
B) Everyone gets a fair cut of the final price; the marketer will be cut off from the customer unless
all channel members are profitable.
C) The specialty retailers that sell them account for only 25 percent of the cost so that the jeans can
benefit from demand pull.
D) The contract manufacturer for the jeans receives the least percentage of the final price.
E) The marketer of the designer denim jeans typically is not profitable for products like these.
276) During the iPad’s ________ stage of its product life cycle, Apple had great latitude in setting
a price for the product because of a lack of competition.
A) decline
B) maturity
C) growth
D) accelerated development
E) introduction
277) All of the following are legal or ethical considerations when setting a final price except
which?
A) price discrimination
B) predatory pricing
C) price matching
D) price fixing
E) deceptive pricing
278) ________ is among several pricing practices that are closely scrutinized because of potential
unethical or illegal actions.
A) Price fixing
B) Price discounting
C) Regional rollbacks
D) Horizontal bundling.
E) Delayed payment penalties
279) A conspiracy among firms to set prices for a product is referred to as
A) price discrimination.
B) price fixing.
C) predatory pricing.
D) tying arrangements.
E) exclusive dealing.
280) Price fixing is
A) an arrangement a manufacturer makes with a reseller to handle only its products and not those
of a competitor.
B) the practice of charging a very low price for a product with the intent of driving competitors out
of business.
C) the practice of charging different prices to different buyers for goods of like grade and quality.
D) a conspiracy among firms to set prices for a product.
E) a seller’s requirement that the purchaser of one product also buy another product in the line.
281) Price fixing is illegal under the
A) Sherman Act.
B) Consumer Goods Pricing Act.
C) Robinson-Patman Act.
D) Federal Trade Commission Act.
E) Clayton Act.
282) Two or more competitors explicitly or implicitly setting prices is referred to as
A) competitive collusion.
B) vertical price fixing.
C) horizontal price fixing.
D) lateral price fixing.
E) price cooperation.
283) Controlling agreements between independent buyers and sellers whereby sellers are required
to not sell products below a minimum retail price is called
A) competitive collusion.
B) price cooperation.
C) horizontal price fixing.
D) lateral price fixing.
E) vertical price fixing.
284) Vertical price fixing refers to
A) two or more competitors explicitly or implicitly setting prices.
B) the practice of charging different prices to different buyers for goods of like grade and quality.
C) controlling agreements between independent buyers and sellers whereby sellers are required
not to sell products below a minimum retail price.
D) a conspiracy among firms to set prices for a product or service.
E) a seller’s requirement that the purchaser of one product also buy another product in the line.
285) Mark Johnson, the manager of a discount consumer electronics store, was approached by the
manufacturer’s representative on behalf of a marketer of a popular and profitable line of storage
racks. The manufacturer’s representative implied that if Johnson didn’t raise the retail prices for the
storage racks to those paid by the marketer’s non-discount customers, Johnson’s supply of racks
may be severely curtailed. The manufacturer’s representative was guilty of attempting
A) horizontal price-fixing.
B) vertical price-fixing.
C) price discrimination.
D) predatory pricing.
E) bait and switch pricing.
286) Price discrimination is
A) the practice of charging different prices to different buyers for goods of like grade and quality.
B) an arrangement a manufacturer makes with a reseller to handle only its products and not those
of a competitor.
C) the practice of charging a very low price for a product with the intent of driving competitors out
of business.
D) a conspiracy among firms to set prices for a product or service.
E) a seller’s requirement that the purchaser of one product also buy another product in the line.
287) The practice of charging different prices to different buyers for goods of like grade and
quality is referred to as
A) horizontal price-fixing.
B) resale price maintenance.
C) price discrimination.
D) predatory pricing.
E) bait and switch pricing.
288) Price discrimination is illegal under the
A) Sherman Act.
B) Consumer Goods Pricing Act.
C) Robinson-Patman Act.
D) Federal Trade Commission Act.
E) Anti-Competitive Act.
289) In controversial move, Amazon.com was caught manipulating its prices. Avid DVD buyers,
buying in quantity for resale, found that the online retailer was offering different customers
different prices for the same DVD, and complained vociferously. Company officials admitted that
the company was trying to see how much it could charge for an item before buyers balked.
Amazon was caught attempting
A) horizontal price-fixing.
B) price discrimination.
C) resale price maintenance.
D) predatory pricing.
E) bait and switch pricing.
290) Price deals that mislead consumers fall into the category of
A) predatory pricing.
B) deceptive pricing.
C) price discrimination.
D) caveat emptor.
E) resale price maintenance.
291) Deceptive pricing practices are outlawed by legislation and enforced by which federal
agency?
A) Consumer Protection Agency
B) U.S. Department of Justice
C) Federal Communications Commission
D) U.S. Department of Commerce
E) Federal Trade Commission
292) To promote their business, some psychics advertise free tarot-card readings and other insights
into their customers’ futures on television. Unfortunately, this “free reading” has cost some
unsuspecting callers as much as $700 in phone charges. This sort of pricing practice would be
primarily monitored by the
A) Consumer Protection Agency.
B) U.S. Department of Justice.
C) Federal Trade Commission.
D) Federal Communications Commission.
E) Consumer Product Safety Commission.
293) When a firm offers a very low price on a product to attract customers to a store, and once in
the store, the customer is persuaded to purchase a higher-priced item, the practice is referred to as
A) predatory pricing.
B) deceptive pricing.
C) price discrimination.
D) caveat emptor.
E) bait and switch.
294) A hardware store advertises a 3/8″ Black and Decker Power Drill for $29.95. You enter the
store intending to purchase the drill. The salesperson informs you that they are all sold out. She
tells you that the sale drills were factory seconds and that if you are going to be doing any kind of
serious woodworking, you should buy the Model 3309, which sells for $49.99. This scenario has
elements of which type of illegal pricing practice?
A) predatory pricing
B) price discrimination
C) price fixing
D) bait and switch
E) conditional bargains
295) The practice of charging a very low price for a product with the intent of driving competitors
out of business is referred to as
A) price fixing.
B) predatory pricing.
C) price discrimination.
D) deceptive pricing.
E) geographical pricing.
296) Predatory pricing is
A) an arrangement a manufacturer makes with a reseller to handle only its products and not those
of a competitor.
B) the practice of charging different prices to different buyers for goods of like grade and quality.
C) the practice of charging a very low price for a product with the intent of driving competitors out
of business.
D) a conspiracy among firms to set prices for a product or service.
E) a seller’s requirement that the purchaser of one product must also buy another product in the
line.
297) Predatory pricing is
A) most effective in the growth stage of the product life cycle.
B) a popular technique preferred by online businesses.
C) illegal but often difficult to prosecute.
D) most effective in business-to-business marketing.
E) one of the most widely used pricing practices for professional marketers.
298) In the early 1980s, typical round-trip coach airfares from the East Coast to London were more
than $500. Then Freddie Laker introduced the People’s Express, a competing service into Newark
at $350. Major airlines matched his price and did so until they drove People’s Express out of
business. Then prices shot back up to over $500. A lawsuit filed under the Sherman Act resulted in
a judgment that the major airlines had explicitly tried to destroy a competitor. The People’s
Express case is an example of ________ on the part of the major airlines.
A) price fixing
B) price discrimination
C) deceptive pricing
D) predatory pricing
E) pricing constraints
299) Bob Biltmore owns dozens of successful print shops in the Midwest. Biltmore’s shops
specialize in low-cost, black-and-white copies and feature user-friendly machines consumers can
easily operate. In recent months, Biltmore has noticed more competition near his stores. In an
attempt to eliminate the competition, Biltmore has decided to charge a very low price for his
black-and-white copies, a price so low his competitors will be forced to close. After that, Biltmore
plans to raise copy prices. He plans to engage in the illegal and unethical practice of
A) price fixing.
B) price inflation.
C) deceptive pricing.
D) competitive pricing.
E) predatory pricing.
300) Identifying pricing objectives and constraints would occur during which stage of the
price-setting process?
A) Selecting an approximate price level
B) Defining the scope of the product
C) Setting the list or quoted price
D) Evaluating the success of the price strategy
E) Making special adjustments to the list price
301) Estimating a break-even point would occur during which stage of the price-setting process?
A) Defining the scope of the product
B) Selecting an approximate price level
C) Setting the list or quoted price
D) Evaluating the success of the price strategy
E) Making special adjustments to the list price
302) Determining cost, volume, and profit relationships would occur during which stage of the
price-setting process?
A) Defining the scope of the product
B) Selecting an approximate price level
C) Setting the list or quoted price
D) Evaluating the success of the price strategy
E) Making special adjustments to the list price
303) After setting an approximate price level, the marketer proceeds to which step of the
price-setting process?
A) defining the scope of the product
B) seeking regulatory approval for the price point
C) setting the list or quoted price
D) evaluating the success of the price strategy
E) making special adjustments to the list price
304) Setting one price for all buyers of a product or service is referred to as
A) customary pricing.
B) a one-price policy.
C) a dynamic pricing policy.
D) standard markup pricing.
E) uniform pricing.
305) A one-price policy refers to
A) setting different prices for products and services in real time in response to supply and demand
conditions.
B) setting the price of an entire line of products at a single specific pricing point.
C) simultaneously setting prices for all items in a product line to cover the total cost and produce a
profit for the complete line, not necessarily for each item.
D) adding a fixed percentage to the cost of all items in a specific product class.
E) setting one price for all buyers of a product or service.
306) Another name for a one-price policy is
A) customary pricing.
B) fixed pricing.
C) dynamic pricing.
D) standard markup pricing.
E) uniform pricing.
307) When you buy a used car from a CarMax dealership, you are offered the car at a “no haggle”
price. You can buy it or not, but there is no negotiating the published price because of the seller’s
A) customary pricing strategy.
B) one-price policy.
C) uniform pricing policy.
D) dynamic pricing policy.
E) dynamic pricing strategy.
308) Family Dollar Stores, like Dollar Value Stores and 99¢ Only Stores, use what type of pricing
policy?
A) dynamic pricing
B) customary pricing
C) flexible pricing
D) one-price
E) at-market pricing