e.
all of the above are reasons
56. All of the following are geographic pricing methods EXCEPT:
a.
latitude pricing
b.
FOB origin pricing
c.
zone pricing
d.
freight absorption pricing
e.
basing-point pricing
57. A price tactic that requires the purchaser to absorb the freight costs from the shipping point is called
_____. In this case, the farther buyers are from sellers, the more they pay because transportation costs
generally increase with the distance merchandise is shipped.
a.
basing-point pricing
b.
zone pricing
c.
uniform delivered pricing
d.
freight absorption pricing
e.
FOB origin pricing
58. The term FOB is an acronym for:
a.
free on board
b.
fee on buyer
c.
first on board
d.
freight on board
e.
freight origin buyer
59. With _____, the seller pays the actual freight charges and bills every purchase with an identical, flat
freight charge.
a.
uniform delivered pricing
b.
zone pricing
c.
FOB origin pricing
d.
freight absorption pricing
e.
basing-point pricing
60. Uniform delivered pricing enables a firm to:
a.
charge each customer the actual cost of shipping its products
b.
stir up price competition between buyers
c.
maintain a nationally advertised price
d.
discriminate in favor of buyers that are geographically closer to the seller
e.
charge each customer its fair share of the cost of shipping
61. Uniform delivered pricing:
a.
creates no geographic price discrimination
b.
is sometimes called “postage stamp pricing”
c.
is prevalent in the steel, cement, corn oil, and lead industries
d.
is common where freight costs are a large portion of total costs
e.
is calculated from regional base points
62. L.L. Bean charges all customers the same flat freight rate. It uses:
a.
FOB origin pricing
b.
zone pricing
c.
freight absorption pricing
d.
basing-point pricing
e.
uniform delivered pricing
63. Claxton Bakery recently began selling its fruitcakes online. If Claxton wants a simple pricing system
that allows for different shipping charges depending on geographic segment or region, the company
should use _____ pricing.
a.
two-part
b.
uniform delivered
c.
freight absorption
d.
flexible
e.
zone
64. Dancing Pigs Bar-B-Que Sauce is a product of the Bar-B-Q Shop located in Memphis, Tennessee. It’s
also sold online for $88 a case, including shipping and handling. The Bar-B-Q shop covers the cost of
shipping and uses _____ pricing policy.
a.
penetration
b.
skimming
c.
zone
d.
basing point
e.
freight absorption
65. An Alabama-based catalog retailer sells fireplace equipment such as screens and andirons. Its
customers in New England are charged one shipping rate, and customers west of the Rocky Mountains
are charged a different rate. Customers in the midwestern states are charged yet another rate. What
kind of geographic pricing is the catalog retailer using?
a.
FOB origin pricing
b.
FOB factory
c.
Zone pricing
d.
Freight absorption pricing
e.
Uniform delivered pricing
66. If a company decides to divide its market area into segments or regions and charge a flat rate for
freight to all customers in a given region, the company is using _____ pricing.
a.
zone
b.
uniform delivered
c.
freight absorption
d.
FOB origin
e.
basing-point
67. If the seller pays all or part of the actual freight charges and does not pass them on to the buyer, the
seller is using _____ pricing.
a.
freight absorption
b.
uniform delivered
c.
zone
d.
FOB origin
e.
basing-point
68. If a manufacturer designates a shipping point from which to calculate all freight charges and charges
customers the freight costs from that point (even if the goods were shipped from another location), the
manufacturer is using _____ pricing.
a.
freight absorption
b.
uniform delivered
c.
zone
d.
FOB origin
e.
basing-point
69. A national manufacturer of car parts has six warehouses and has a pricing policy of charging freight
from the closest warehouse to the customer, regardless of where parts are shipped from. For instance,
if the customer is in Vancouver, British Columbia, the closest warehouse to the customer is in Seattle,
Washington. If the ordered car part actually comes from the Alabama warehouse, the customer still
pays freight from Seattle. The manufacturer uses _____ pricing.
a.
FOB origin
b.
uniform delivered
c.
zone
d.
basing-point
e.
freight absorption
70. Which of the following is a price tactic that offers all goods and services at the same price (or perhaps
two or three prices)?
a.
Primary pricing
b.
Uniform-price tactic
c.
Single-price tactic
d.
Constant-pricing
e.
EDLP
71. The 99-Center is a retail store where all of the merchandise is priced at 99 cents. This retailer uses:
a.
a single-price tactic
b.
flexible pricing
c.
price lining
d.
price bundling
e.
leader pricing
72. Single-price selling:
a.
removes price comparisons from the buyer’s decision-making process
b.
does not benefit the retailer
c.
is most effective when used during an inflationary period
d.
encourages clerical errors
e.
is accurately described by none of these choices
73. The Used Car Mall lets salespeople charge different customers different prices for essentially the same
automobile depending on how good the customer is at negotiating price. It uses:
a.
two-part pricing
b.
an illegal pricing policy
c.
flexible pricing
d.
bait and switch practices
e.
price maintenance
74. Suppose an advertising agency develops logos for its clients. It charges $10,000 per logo—whether the
team that’s working on the logo takes 30 minutes or days to design the logo. Agency management
explain that clients pay for the agency’s expertise and creativity, not the amount of time it literally
takes to develop a logo. This pricing approach is known as:
a.
professional services pricing
b.
potential (or base) pricing
c.
price maintenance
d.
psychological pricing
e.
flexible (or variable) pricing
75. The tactic that allows different customers to pay different prices for essentially the same merchandise
bought in equal quantities is called _____. This tactic is often found in the sale of shopping goods,
specialty merchandise, and most industrial goods except supply items.
a.
zoning (or basing) pricing
b.
illegal price fixing
c.
price maintenance
d.
psychological (or odd-even) pricing
e.
flexible (or variable) pricing
76. All of the following are potential disadvantages of a flexible pricing policy EXCEPT:
a.
it causes inconsistent profit margins
b.
it enables a seller to close a sale with a price-conscious customer
c.
it causes ill will among customers if they discover that other customers are paying lower
prices
d.
it enables salespeople to automatically lower the price to make a sale
e.
it can spark a price war with competitors
77. Trade-ins often go hand-in-hand with:
a.
price skimming
b.
professional services pricing
c.
flexible pricing
d.
single-pricing
e.
penetration pricing
78. All of the following statements regarding trade-ins are true EXCEPT:
a.
If a trade-in is involved, the consumer must negotiate two prices, one for the new product
and one for the existing product.
b.
On average, customers who traded-in an automobile when purchasing a new one end up
paying more than customers who simply buy a new car from a dealer.
c.
Research found that trade-in customers tend to care more about the trade-in value they
receive than the price they pay for the new product.
d.
About 95 percent of all new car sales involve a trade-in.
e.
All of the above statements are true.
79. Lea Kirkham is a physician. She charges each patient the same price for a physical examination,
whether the procedure takes 10 minutes or a full hour. Which pricing policy is Dr. Kirkham following?
a.
Professional services pricing
b.
Potential (or base) pricing
c.
Price maintenance
d.
Psychological pricing
e.
Flexible (or variable) pricing
80. Often a seller will establish a series of prices for a family of merchandise items. There may be several
different models at specific price points but no prices in between. This policy is called:
a.
price lining
b.
price bracketing
c.
family pricing
d.
variable pricing
e.
price bundling
81. At the Greenville Florist, there are four different prices for funeral bouquets. The smallest bouquet
sells for $30; there is also a $40 version and a $75 version. For those who want to express their grief
through the purchase of a dramatic floral arrangement, the florist also offers a $150 value. The owner
of the florist shop has chosen price lining because it will:
a.
enable the shop to carry a larger total inventory
b.
maintain all of the product line at the same stage in the product life cycle
c.
confuse customers and allow salespeople to sell more of the expensive models
d.
reach several different target market segments
e.
thwart competitors that are trying to sell similar products
82. Why is price lining a valuable tactic for marketing managers?
a.
Price lining results in a greater inventory carrying charge.
b.
Reduces confusion for its customers.
c.
A company that uses price lining has more price markdowns and greater markup.
d.
The price lining strategy allows the company to gain brand loyalty from its targeted
segments.
e.
Price lining tends to confuse customers and requires them to listen closely to the
salesperson’s pitch.
83. Price lining presents certain drawbacks to sellers, especially if:
a.
costs are continually rising
b.
competition suddenly increases
c.
profit margins are lowered
d.
demand is rising
e.
costs are flat
84. The owner of a neighborhood hardware store has decided to sell a set of three padlocks for $5. He
hopes the below-cost price for the locks will attract current and new customers who will also buy
regularly priced items. The owner is encouraging store patronage through:
a.
deceptive pricing
b.
incentive pricing
c.
pricing lining
d.
cumulative pricing
e.
leader pricing
85. Leader pricing is used to:
a.
attract customers to a store so they can be persuaded to buy a more expensive product
instead
b.
bundle products together for sale
c.
attract customers to the store so they will buy other products in addition to the leader
product
d.
price products at odd-numbered amounts to stimulate demand
e.
maintain a status quo pricing strategy
86. Every week, Keller’s Grocery runs a weekly ad in the newspaper touting its sale prices on a number of
products. For example, this week the store is selling cherries for $1.50/pound and boneless chicken
breasts for 99 cents/pound. Keller’s sells these products at a below-market price to lure customers
into the store in hopes that while they are in the store to buy chicken and cherries, they will also buy
other grocery items that have a much higher markup. The store is using:
a.
price lowballing
b.
price maintenance
c.
price lining
d.
leader pricing
e.
functional pricing
87. _____ tries to get customers into the store with misleading advertising and then uses high-pressure
selling to persuade the consumer to buy something else more expensive.
a.
Functional pricing
b.
Bait pricing
c.
Sales-oriented pricing
d.
Production-oriented pricing
e.
Decoy pricing
88. Cashtown Used Cars aired a radio spot announcing, “Today only, previously owned cars are only
$200!” Meghan just wanted some kind of in-town transportation. When she went to Cashtown, the
salesperson said, “We have only one $200 car left, and it’s not the kind of car I’d want my wife to
drive. However, we do have some great deals on newer models.” Meghan went home with an $8,000
used car. Cashtown is probably practicing:
a.
decoy pricing
b.
deal pricing
c.
functional pricing
d.
bait pricing
e.
price pressuring
89. Which type of pricing means pricing at odd-numbered prices to connote a bargain and pricing at
even-numbered prices to imply quality?
a.
Bait pricing
b.
Price bundling
c.
1–2 pricing
d.
Odd-even pricing
e.
Two-part pricing
90. If a marketer decides to price goods at odd-numbered dollar amounts to denote bargains, and at
even-numbered amounts to denote quality, he or she is using:
a.
two-part pricing
b.
price lining
c.
price bracketing
d.
decoy pricing
e.
psychological pricing
91. Odd-even pricing is also called:
a.
psychological pricing
b.
1-2 pricing
c.
bait pricing
d.
price bundling
e.
two-part pricing
92. Marketing two or more products in a single package for a special price is known as:
a.
price bundling
b.
two-part pricing
c.
psychological pricing
d.
price lining
e.
family pricing
93. AMC Theaters offers customers a package that includes two movie tickets, two small drinks and one
small popcorn all priced together at $29.99. this pricing technique is called:
a.
price lining
b.
two-part pricing
c.
horizontal pricing
d.
price bundling
e.
bait pricing
94. The Comcast Triple Play package includes cable television, Internet, and telephone service for a price
significantly lower than the cost of the three services priced separately. This is an example of _____.
a.
multiple unit pricing
b.
professional services pricing
c.
price lining
d.
price bundling
e.
two-part pricing
95. In a catalog targeted to people who like to bake, customers can buy a single yeast bread mix designed
specifically to be baked in bread machines for $3.95 each or 12 different mixes for $37.50. This is an
example of:
a.
price bundling
b.
CRM pricing
c.
psychological pricing
d.
penetration pricing
e.
status quo pricing
96. Reducing the services that come with the basic product is called:
a.
demarketing
b.
contraction
c.
two-part pricing
d.
retroactive pricing
e.
unbundling
97. Tickets to the combined amusement park and water slide were $49 for the day. Then the company
gave customers the option to purchase tickets for either the amusement park or the water slide for $18.
To help keep costs in line, the park management also began charging its customers a small parking fee.
Initially, the cost of parking was figured into the $49 price. The amusement park is using:
a.
price lining
b.
potential (or base) pricing
c.
unbundling
d.
professional services pricing
e.
price maintenance
98. Louisiana State University football season ticket holders have to pay a fee (also known as a
“donation”) to the LSU Foundation every January, which is not deemed to be part of the ticket price.
They pay for their tickets later in the year for the next football season. The Foundation fee must be
paid in order to retain the rights to purchase a season ticket. LSU is using:
a.
multiple unit pricing
b.
professional services pricing
c.
price lining
d.
price bundling
e.
two-part pricing
99. Consumers sometimes prefer two-part pricing because:
a.
prices are often perceived as quality indicators
b.
consumers like to be in control of costs
c.
consumers are uncertain about the number and types of activities they might use at places
like amusement parks
d.
consumers prefer a limited number of choices
e.
prices have little or no psychological influence on most consumers
100. Best Buy charges customers a 15 percent restocking fee on some returned items. A restocking fee is
for putting a returned item back into inventory. This is an example of a:
a.
bait-and-switch
b.
trade-in
c.
consumer penalty
d.
product absorption strategy
e.
price bundle
101. Costs that are shared in the manufacturing and marketing of several products in a product line are
called:
a.
joint costs
b.
integrated costs
c.
fixed costs
d.
variable costs
e.
combined costs
102. Post makes several varieties of cereals. In promoting this product line, Post offers a 50-cents-off
coupon that can be used to purchase any of its cereals. Therefore, Post must consider _____ when
pricing its cereals.
a.
joint costs
b.
differential costs
c.
bundling costs
d.
potential (or basing) costs
e.
factorial costs
103. Alissa Dunn is the owner and operator of Dunn’s Best Jams, which she sells at craft festivals. She only
makes and sells three types of jams—pecan pie jam, chocolate pie jam, and lemon tart jam. The costs
of leasing her professional kitchen for manufacturing, travel to craft shows, insurance, and so on are
allocated on an equal basis to the three types of jam sold. In other words these costs are:
a.
derived costs
b.
elastic costs
c.
joint costs
d.
revenue impediments
e.
synergistic costs
104. Nestlé Purina sells chicken feed and Wheat Chex, but the sale of one of these products has no known
impact on demand for the other. In this case, the two products have a(n) _____ relationship.
a.
inverse
b.
neutral
c.
complementary
d.
substitute
e.
negative
105. If items are _____, an increase in the sale of one good causes an increase in the sale of the other (and
vice versa).
a.
inverse
b.
neutral
c.
complementary
d.
substitute
e.
negative
106. Kule, Inc. produces three different lines of car racks for transporting large, bulky items.
Bicycle
Luggage
Skis
Sales
$140,000
$100,000
$160,000
Less: cost of goods sold
110,000
110,000
140,000
Gross margin
30,000
(10,000)
20,000
Total company net annual profit = $40,000
Included in the cost of goods sold is $12,000 of annual rent (a fixed cost) that is distributed equally
among the three product lines. As a consultant to Kule, will you recommend that it drop the luggage
rack line?
a.
No, dropping the line will actually decrease overall net profits.
b.
Yes, dropping the line will increase company net profits.
c.
No, dropping the line will result in increased fixed costs.
d.
Yes, dropping the line will reduce joint costs.
e.
Yes, dropping the line will reduce cost of goods sold and increase revenues.
107. When using _____, price is not set on the product until the item is either finished or delivered.
a.
price shading
b.
escalator pricing
c.
delayed-quotation pricing
d.
bid pricing
e.
two-part pricing
108. Delayed-quotation pricing:
a.
requires the seller to place a later date on the product invoice to help accounts receivable
in recording transactions
b.
allows the final selling price to reflect cost increases incurred between the time the order is
placed and the final delivery takes place
c.
prevents the competitor from submitting an earlier bid
d.
requires a seller to submit a bid after the closing date
e.
is also known as price-shading bidding
109. A(n) _____ allows for price increases based on the cost-of-living index or some other formula.
a.
consumer penalty
b.
price shade
c.
price allowance
d.
escalator price clause
e.
elasticity quotient
110. Escalator pricing is:
a.
a demand-oriented pricing tactic