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d. Consumer demand for higher priced goods remains unchanged even if product quality declines.
101. Which term refers to a deduction from list price applied to a customer’s total purchases made during a specific
period?
a. Cumulative quantity discount
b. Noncumulative quantity discount
c. Cash discount
d. Quantity discount
102. Which of the following happens if demand is elastic?
a. As price goes up, consumer demand changes.
b. The competition between organizations reduces.
c. Products will not have any substitutes.
d. The purchasing power of the consumer decreases.
103. A price reduction offered to buyers who purchase product in multiple units or above a specified dollar amount is
termed a ______ discount.
a. trade
b. cash
c. seasonal
d. quantity
104. The quantity of a product that will be offered to the market by a supplier at various prices for a specified period
determines the product’s ______.
a. demand
b. supply
c. market share
d. product share
105. Which of the following refers to a private electronic network that links a company with its suppliers and customers?
a. Intranet
b. Internet
c. Extranet
d. Intercom
106. Which statement best defines price fixing?
a. A policy whereby a firm charges a high introductory price, often coupled with heavy promotion
b. A policy whereby a firm charges a relatively low price for a product when it is first rolled out
c. An agreement between two or more firms on the price they will charge for a product
d. Charging a price identical to or very close to the competition’s price
107. Unlike niche-oriented shopping bots, broad-based shopping bots
a. give pricing power to the retailers.
b. search for prices for only one type of product.
c. are programs that search websites which are based on a Yellow Pages type of model.
d. search sites like SeatGeek and Kayak.
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108. When Lofonift Inc. introduced its flagship MP3 player, it captured the market by offering the product at a very low
price. This gradually forced many of its competitors out of business. Once its competitors were out of business, Lofonift
Inc. raised the price. In this scenario, Lofonift Inc. most likely indulged in _____.
a. predatory pricing
b. price discrimination
c. status quo pricing
d. price fixing
109. When using _____, the seller pays all or part of the actual shipment charges and does not pass them on to the buyer.
a. FOB origin pricing
b. freight absorption pricing
c. uniform delivered pricing
d. basing-point pricing
110. A software program that searches the Web for the best price for a particular item that you wish to purchase is called
______________.
a. a shopping bot
b. the extranet
c. a wireless setup
d. an internet auction
111. For convenience, pricing objectives can be divided into three categories:
a. refundable, competitive, and attainable.
b. perceived, actual, and situational.
c. differentiated, niche, and undifferentiated.
d. profit oriented, sales oriented, and status quo.
112. The newly opened Stone Restaurant was unable to attract a lot of customers. Because the restaurant’s owner had to
pay back the loan that he had taken to start the restaurant, he decided to offer a 20 percent discount on the entire menu on
weekends. In this scenario, the owner’s pricing objective is to maximize _____.
a. market share
b. profit
c. asset
d. sales
113. A reasonable level of profits consistent with the level of risk an organization faces is called ____________.
a. satisfactory profit
b. return on investment
c. highest level of profit
d. marginal revenue
114. A price tactic in which different customers pay different prices for essentially the same merchandise bought in equal
quantities is called ____________.
a. FOB origin pricing
b. zone pricing
c. uniform delivered pricing
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d. flexible pricing
115. Because it denotes a high price relative to the prices of competing products, ______ is sometimes called a “market-
plus” approach to pricing.
a. price skimming
b. price fixing
c. status quo pricing
d. bait-and-switch pricing
116. Which statement best describes a similarity between price fixing and predatory pricing?
a. Both are illegal under the Federal Trade Commission Act.
b. Both are fine-tuning techniques that do not change the general price level.
c. Both typically discourage and block competition from entering a market.
d. Both may ignore demand or cost or both.
117. Identify a statement that is true of status quo pricing.
a. It leads to optimal pricing of a product.
b. It requires serious planning and is difficult to implement.
c. It focuses on the demand for and the costs of a product.
d. It can lead to a pricing disaster.
118. Which term refers to selling commodities of similar grade and quality to two or more different buyers at different
prices, within a reasonably short time, where the result would be to substantially lessen competition?
a. Price discrimination
b. Price fixing
c. Bait pricing
d. Penetration pricing
119. A company’s product sales as a percentage of total sales for that industry are known as __________.
a. market share
b. revenue
c. return on investment
d. profit
120. Marketing two or more products in a single package for a special price is called _____________.
a. price bundling
b. bait pricing
c. odd-even pricing
d. loss-leader pricing
121. The marketing manager of Raven Golf Club finds that the club can increase its market share if it slashes membership
prices during the first quarter of the year. However, it would mean that the club will not achieve its target return on
investment. This conflict illustrates
a. the need to eliminate low-profit products.
b. a lack of competition in the marketplace.
c. how pricing operates in an ideal marketplace.
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d. the need for trade-offs in pricing objectives.
122. A situation in which an increase or a decrease in price will not significantly affect demand for the product is called
__________ demand.
a. elastic
b. inelastic
c. stagnant
d. fluctuating
123. Which of the following defines revenue?
a. The price charged to customers multiplied by the number of units sold
b. Net profit after taxes divided by total assets
c. Profit minus expenses
d. Something that is given up in an exchange to acquire a good or service
124. In which stage of the product life cycle does price decrease as competition increases and inefficient, high-cost firms
are eliminated?
a. Growth stage
b. Maturity stage
c. Introductory stage
d. Decline stage
125. Among the following, that which is given up in an exchange to acquire a good or service is known as ______.
a. price
b. cost
c. margin
d. profit
126. Describe what is meant by “base price,” and explain the concept of price lining as a pricing tactic for fine-tuning the
base price and offsetting rising costs.
127. Discuss the role of price in promotion strategies for products.
128. Explain the significance of market share as a sales-oriented pricing objective.
129. Briefly explain how distribution strategy acts as a determinant of price.
130. Define elasticity of demand and discuss the factors that affect elasticity.
131. Explain what is meant by shopping bots, identify several different types of these bots, and discuss how they help
consumers make purchase decisions.
132. Define price and discuss the role of price in the evaluation of product alternatives.
133. Discuss the relationship between the price and quality of a product and how price affects a purchase decision.
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134. Define what is meant by consumer penalties and provide reasons why companies would impose them on consumers.
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Answer Key
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