TRUE/FALSE QUESTIONS Answer whether the following statements are true or false
1 Discuss the importance of pricing decisions to the economy and to the individual firm
2. Target return on investment (ROI) is the most common pricing objective used by firms. true false
3. PorterCo has a goal of cash maximization, which is an appropriate long-term pricing objective for most firms. true false 4. Status quo pricing objectives indicate that prices may change because prices are adjusted to meet the competition. true false
3. PorterCo has a goal of cash maximization, which is an appropriate long-term pricing objective for most firms. true false
4. Status quo pricing objectives indicate that prices may change because prices are adjusted to meet the competition. true false
3 Explain the role of demand in price determination
5. When demand for a product has unitary elasticity, a firm will lose revenue if it decreases the price. true false 6. For a product like butter, the price is small relative to a consumer's purchasing power, and there are several alternate uses for the product. If this information is true, butter probably has elastic demand. true false
5. When demand for a product has unitary elasticity, a firm will lose revenue if it decreases the price. true false
6. For a product like butter, the price is small relative to a consumer's purchasing power, and there are several alternate uses for the product. If this information is true, butter probably has elastic demand. true false
4 Describe cost-oriented pricing strategies
7. Markup pricing is one of the most common pricing methods used by intermediaries. true false 8. Break-even analysis determines what sales volume must be reached for a product before the company's total revenue equals total costs. true false
8. Break-even analysis determines what sales volume must be reached for a product before the company's total revenue equals total costs. true false
5 Demonstrate how the product life cycle, competition, distribution and promotion strategies, and perceptions of quality can affect price
9. When a firm enters an industry in which products are in the maturity phase of the product life cycle, the firm generally faces a decision of whether to price at the market level or above the market. true false 10. Consumers use price as an indicator of the quality of a product, especially when consumers have a lot of knowledge about the product. true false
10. Consumers use price as an indicator of the quality of a product, especially when consumers have a lot of knowledge about the product. true false
6 Describe the procedure for setting the right price
11. The first step to setting price is to estimate product demand and costs. true false 12. A powerful and prestigious food company wants to introduce yet another brand of children's cereal, similar to the many others already on the market. This manufacturer would have a great amount of freedom in choosing a price for this new cereal. true false 13. It makes the most sense to use price skimming as a price policy when demand is relatively inelastic in the upper ranges of the demand curve. true false 14. Greg's Gas Station is located across the street from another competitive gas station. For weeks, the two have been in a price war. When Greg decreases his gas price by two cents per litre, his competitor follows him. This is an example of status quo pricing. true false
12. A powerful and prestigious food company wants to introduce yet another brand of children's cereal, similar to the many others already on the market. This manufacturer would have a great amount of freedom in choosing a price for this new cereal. true false
13. It makes the most sense to use price skimming as a price policy when demand is relatively inelastic in the upper ranges of the demand curve. true false
14. Greg's Gas Station is located across the street from another competitive gas station. For weeks, the two have been in a price war. When Greg decreases his gas price by two cents per litre, his competitor follows him. This is an example of status quo pricing. true false
7 Identify the legal and ethical constraints on pricing decisions
15. If the presidents of AT&T, MCI, and Sprint got together and decided what price they would all charge for their long-distance services, the presidents would be engaged in price discrimination. true false
8 Explain how discounts, geographic pricing, and other special pricing tactics can be used to fine-tune the base price
16. Promotional allowances given to retailers by manufacturers are usually passed down to consumers in the form of a temporary discounted price. true false 17. Functional discounts, noncumulative quantity discounts, and promotional allowances are examples of rebates given to the trade. true false
16. Promotional allowances given to retailers by manufacturers are usually passed down to consumers in the form of a temporary discounted price. true false
17. Functional discounts, noncumulative quantity discounts, and promotional allowances are examples of rebates given to the trade. true false
MULTIPLE-CHOICE QUESTIONS Select the response that best answers the question, and write the corresponding letter in the space provided.
2 List and explain a variety of pricing objectives
19. The Foxy Furniture Firm has a pricing policy of setting prices so that the retail price is as high as the market will tolerate. However, the company constantly strives to keep costs at an industry low. The pricing policy is best described as: a. market share pricing b. status quo pricing c. demand oriented d. sales maximization e. profit maximization 20. Bartyl's Beer determines its prices based on maintaining revenues and expenses at acceptable levels. This would lead to pricing based on: a. satisfactory profits b. stable sales levels c. profit maximization d. market share e. consumer demand 21. The Kandy Korner managed to exceed its target ROI for the current fiscal year. The following results were found on its financial statements: Gross revenues: $250,000 Assets: $500,000 Gross profits: $100,000 Liabilities: $200,000 Net profits: $ 50,000 Equity: $300,000 What was the actual ROI for The Kandy Korner? a. 20 percent b. 50 percent c. 33.33 percent d. 10 percent e. none of the above 22. A Japanese electronics firm has launched a new CD player in the competitive Canadian market. The firm prices its products very low in order to gain a foothold in the market. This pricing objective is: a. increasing market share b. maximizing dollar sales c. satisfactory profits d. profit maximization e. target ROI 23. Kmart has lowered the price of a GE coffeemaker to $19.88. Canadian Tire and Wal-Mart lower their prices on the coffeemaker to $19.97 and $19.85 the day after Kmart's price change. This is: a. cost-plus pricing b. target return pricing c. market share pricing d. predatory pricing e. status quo pricing
19. The Foxy Furniture Firm has a pricing policy of setting prices so that the retail price is as high as the market will tolerate. However, the company constantly strives to keep costs at an industry low. The pricing policy is best described as: a. market share pricing b. status quo pricing c. demand oriented d. sales maximization e. profit maximization
20. Bartyl's Beer determines its prices based on maintaining revenues and expenses at acceptable levels. This would lead to pricing based on: a. satisfactory profits b. stable sales levels c. profit maximization d. market share e. consumer demand
21. The Kandy Korner managed to exceed its target ROI for the current fiscal year. The following results were found on its financial statements:
Gross revenues: $250,000 Assets: $500,000 Gross profits: $100,000 Liabilities: $200,000 Net profits: $ 50,000 Equity: $300,000
What was the actual ROI for The Kandy Korner? a. 20 percent b. 50 percent c. 33.33 percent d. 10 percent e. none of the above
22. A Japanese electronics firm has launched a new CD player in the competitive Canadian market. The firm prices its products very low in order to gain a foothold in the market. This pricing objective is: a. increasing market share b. maximizing dollar sales c. satisfactory profits d. profit maximization e. target ROI
23. Kmart has lowered the price of a GE coffeemaker to $19.88. Canadian Tire and Wal-Mart lower their prices on the coffeemaker to $19.97 and $19.85 the day after Kmart's price change. This is: a. cost-plus pricing b. target return pricing c. market share pricing d. predatory pricing e. status quo pricing
24. Ben's Bagel company used to price its bagels at 25> each. At this price, the company sold an average of 5,000 bagels per day. The company recently decided to double its price to 50>, and the company watched its demand fall to 1,500 per day. The demand for bagels is most likely: a. inelastic b. unitary c. equilibrium d. elastic e. profitable 25. When Pinta-Painting Co. first started, it charged $750 per house and could not keep up with all the calls. Pinta-Painting raised the price to $1,000 per house, and now all eight painters are steadily busy but no longer forced to work fourteen-hour days. The $1,000 per house price is probably a(n): a. supply schedule b. price elasticity c. producer surplus d. equilibrium price e. inelastic price 26. When Unicorn Software lowered the price of its investment software package from $800 to $200, demand doubled from five units sold per month to ten units per month. However, total revenue dropped. This is an example of: a. substitute goods b. unitary elasticity c. inelastic demand d. consumer shortage e. elastic demand 27. Gwyn has lowered the price of his custom oven mitts from $6 to $5. He previously sold 300 oven mitts per month and now sells 360 per month. He is experiencing: a. unitary elasticity b. inelastic demand c. elastic demand d. consumer surplus e. producer shortage
24. Ben's Bagel company used to price its bagels at 25> each. At this price, the company sold an average of 5,000 bagels per day. The company recently decided to double its price to 50>, and the company watched its demand fall to 1,500 per day. The demand for bagels is most likely: a. inelastic b. unitary c. equilibrium d. elastic e. profitable
25. When Pinta-Painting Co. first started, it charged $750 per house and could not keep up with all the calls. Pinta-Painting raised the price to $1,000 per house, and now all eight painters are steadily busy but no longer forced to work fourteen-hour days. The $1,000 per house price is probably a(n): a. supply schedule b. price elasticity c. producer surplus d. equilibrium price e. inelastic price
26. When Unicorn Software lowered the price of its investment software package from $800 to $200, demand doubled from five units sold per month to ten units per month. However, total revenue dropped. This is an example of: a. substitute goods b. unitary elasticity c. inelastic demand d. consumer shortage e. elastic demand
27. Gwyn has lowered the price of his custom oven mitts from $6 to $5. He previously sold 300 oven mitts per month and now sells 360 per month. He is experiencing: a. unitary elasticity b. inelastic demand c. elastic demand d. consumer surplus e. producer shortage
28. When the PinkBall company manufactures 1,000 pink balls, the cost of pink dye is $14. When output is raised to 2,500 balls, the cost of the dye is $35. The cost of the pink dye is a(n): a. inventory cost b. demand cost c. fixed cost d. marketing cost e. variable cost 29. The Custom-Natural Pizza store has daily sales that range from 50 to 250 pizzas. Which of the following is the BEST example of one of their fixed costs? a. payment on leased equipment b. flour and tomato sauce c. electricity and gas for baking d. paper products e. cash register tape 30. Output at the Pine Playhouse company changed from fifteen to sixteen playhouses, and the total costs changed from $27,000 to $28,500. What was the marginal cost for the company? a. $1,800 b. $1,781 c. $1,500 d. $27,000 e. $28,500 31. The Glass 'n' Brass Lamp Shoppe figures the price of a lamp by doubling the cost of the lamp (or taking a 100% markup). Which pricing technique is the store using? a. turnover pricing b. keystoning c. marginal revenue pricing d. target ROI pricing e. maximum revenue pricing 32. R.J.'s Health Foods buys a brand of granola cereal for $1.50 and adds 49 cents to the cost to bring the retail price to $1.99. What pricing technique is the store using? a. marginal revenue pricing b. keystoning c. turnover pricing d. markup pricing e. break-even pricing 33. The Lollygag Lollipop Company has the following revenues and costs: Sales price per lollipop: $0.50 Variable costs per lollipop: $0.30 Total fixed costs (annual): $50,000 What is the annual break-even quantity for the company? a. 50,000 b. 250,000 c. 100,000 d. 166,667 e. none of the above 34. The manager of the Toothsome Toothbrush company has calculated the sales volume at which the company's costs equal revenue. The manager announced at the quarterly sales meeting that 150,000 toothbrushes, at an average of $8 per brush, must be sold during next quarter to reach this point. Which important factor has been excluded from this analysis? a. fixed and variable cost determination b. break-even analysis c. target return pricing d. market share e. consumer demand
28. When the PinkBall company manufactures 1,000 pink balls, the cost of pink dye is $14. When output is raised to 2,500 balls, the cost of the dye is $35. The cost of the pink dye is a(n): a. inventory cost b. demand cost c. fixed cost d. marketing cost e. variable cost
29. The Custom-Natural Pizza store has daily sales that range from 50 to 250 pizzas. Which of the following is the BEST example of one of their fixed costs? a. payment on leased equipment b. flour and tomato sauce c. electricity and gas for baking d. paper products e. cash register tape
30. Output at the Pine Playhouse company changed from fifteen to sixteen playhouses, and the total costs changed from $27,000 to $28,500. What was the marginal cost for the company? a. $1,800 b. $1,781 c. $1,500 d. $27,000 e. $28,500
31. The Glass 'n' Brass Lamp Shoppe figures the price of a lamp by doubling the cost of the lamp (or taking a 100% markup). Which pricing technique is the store using? a. turnover pricing b. keystoning c. marginal revenue pricing d. target ROI pricing e. maximum revenue pricing
32. R.J.'s Health Foods buys a brand of granola cereal for $1.50 and adds 49 cents to the cost to bring the retail price to $1.99. What pricing technique is the store using? a. marginal revenue pricing b. keystoning c. turnover pricing d. markup pricing e. break-even pricing
33. The Lollygag Lollipop Company has the following revenues and costs:
Sales price per lollipop: $0.50 Variable costs per lollipop: $0.30 Total fixed costs (annual): $50,000
What is the annual break-even quantity for the company? a. 50,000 b. 250,000 c. 100,000 d. 166,667 e. none of the above
34. The manager of the Toothsome Toothbrush company has calculated the sales volume at which the company's costs equal revenue. The manager announced at the quarterly sales meeting that 150,000 toothbrushes, at an average of $8 per brush, must be sold during next quarter to reach this point. Which important factor has been excluded from this analysis? a. fixed and variable cost determination b. break-even analysis c. target return pricing d. market share e. consumer demand
35. Klean Detergent is the market leader of clothes detergents and is in the maturity phase of its life cycle. There are many competitors in the market that challenge Klean's leadership. Which of the following statements is most likely true about Klean's pricing? a. As a market leader, Klean does not need to worry about price. b. Klean uses price promotion in order to maintain its market leadership. c. Klean must price lower than the other brands to maintain its leadership. d. Klean can increase its price since it is in the maturity stage. e. Klean should maintain a high price to maintain a high quality image. 36. HeartGood's Eggs decided to offer a much larger than customary profit margin to grocery wholesalers and retailers on their new low-cholesterol eggs. This pricing strategy is designed to facilitate all of the following EXCEPT: a. encouraging retailers to advertise this high-margin item b. giving dealers an incentive to promote the new product c. developing wide and convenient distribution d. maximizing profit margin for the producer e. encouraging trial by consumers if priced low by retailers 37. When an innovative new electronics product is introduced into the market, its initial pricing is usually high. This is most likely due to: a. The firm's distribution strategy b. The firm's promotion strategy c. The lack of relevant competition d. The product's quality image e. High product costs 38. Tommy knows little about computer diskettes and does not want to spend the time to learn about them. However, he needs to buy diskettes to use for a consulting project. Not wanting to make a poor choice, he is likely to: a. intuitively make the right choice b. buy an expensive brand of diskette, guessing that the price is related to quality c. avoid making a decision by not buying anything d. revise his goals and buy a computer instead e. buy the cheapest diskettes because most consumers feel that price is not directly related to quality 39. The advertisements for Ramarro Car claim that it is the most expensive car in the world. This is an example of a: a. target return pricing strategy b. market share pricing strategy c. prestige pricing strategy d. maintained markup pricing strategy e. profit maximization pricing strategy 40. The Goldstar Conveyor Corporation builds quality conveyor systems for warehouses, with innovative components and superior durability. The corporation has managed to keep its price lower than its competitors. However, Goldstar's sales have been disappointing. For a fast and simple remedy, Goldstar should: a. reeducate the potential consumers about its products b. lower the quality of its products c. raise prices because of consumer expectations d. emphasize the low price in all the advertising e. look for a different product to manufacture
35. Klean Detergent is the market leader of clothes detergents and is in the maturity phase of its life cycle. There are many competitors in the market that challenge Klean's leadership. Which of the following statements is most likely true about Klean's pricing? a. As a market leader, Klean does not need to worry about price. b. Klean uses price promotion in order to maintain its market leadership. c. Klean must price lower than the other brands to maintain its leadership. d. Klean can increase its price since it is in the maturity stage. e. Klean should maintain a high price to maintain a high quality image.
36. HeartGood's Eggs decided to offer a much larger than customary profit margin to grocery wholesalers and retailers on their new low-cholesterol eggs. This pricing strategy is designed to facilitate all of the following EXCEPT: a. encouraging retailers to advertise this high-margin item b. giving dealers an incentive to promote the new product c. developing wide and convenient distribution d. maximizing profit margin for the producer e. encouraging trial by consumers if priced low by retailers
37. When an innovative new electronics product is introduced into the market, its initial pricing is usually high. This is most likely due to: a. The firm's distribution strategy b. The firm's promotion strategy c. The lack of relevant competition d. The product's quality image e. High product costs
38. Tommy knows little about computer diskettes and does not want to spend the time to learn about them. However, he needs to buy diskettes to use for a consulting project. Not wanting to make a poor choice, he is likely to: a. intuitively make the right choice b. buy an expensive brand of diskette, guessing that the price is related to quality c. avoid making a decision by not buying anything d. revise his goals and buy a computer instead e. buy the cheapest diskettes because most consumers feel that price is not directly related to quality
39. The advertisements for Ramarro Car claim that it is the most expensive car in the world. This is an example of a: a. target return pricing strategy b. market share pricing strategy c. prestige pricing strategy d. maintained markup pricing strategy e. profit maximization pricing strategy
40. The Goldstar Conveyor Corporation builds quality conveyor systems for warehouses, with innovative components and superior durability. The corporation has managed to keep its price lower than its competitors. However, Goldstar's sales have been disappointing. For a fast and simple remedy, Goldstar should: a. reeducate the potential consumers about its products b. lower the quality of its products c. raise prices because of consumer expectations d. emphasize the low price in all the advertising e. look for a different product to manufacture
41. The marketing manager of Techie-TV finds that the firm can gain market share and become the industry leader if it slashes prices by 50 percent. However, the vice-president of finance is committed to reporting a 25 percent return on investment at all times. This conflict illustrates: a. need for eliminating low-profit products b. a lack of concentration on the marketing concept c. pricing in a mature marketplace d. ignoring the target market e. trade-offs in pricing objectives 42. Mona Lisa toothpaste positions its product on its ability to whiten teeth after a few weeks of use. Its price is 30 percent higher than other toothpaste brands. Mona Lisa is using a: a. price-skimming strategy b. penetration pricing strategy c. status quo pricing strategy d. flexible pricing strategy e. leader pricing strategy 43. WestJet Airlines charges some of the lower prices in the industry. As a result, the airline has been able to reach the mass market and to increase the incidence of air travel among those who might have chosen another means of travel. The company's current price policy would best be described as: a. skimming b. flexible c. penetration d. zone e. absorption 44. Zellers employees regularly shop at Wal-Mart stores in order to make certain that Zellers is charging comparable prices. Kmart is engaging in: a. leader pricing b. status quo pricing c. corporate espionage d. flexible pricing e. functional pricing
41. The marketing manager of Techie-TV finds that the firm can gain market share and become the industry leader if it slashes prices by 50 percent. However, the vice-president of finance is committed to reporting a 25 percent return on investment at all times. This conflict illustrates: a. need for eliminating low-profit products b. a lack of concentration on the marketing concept c. pricing in a mature marketplace d. ignoring the target market e. trade-offs in pricing objectives
42. Mona Lisa toothpaste positions its product on its ability to whiten teeth after a few weeks of use. Its price is 30 percent higher than other toothpaste brands. Mona Lisa is using a: a. price-skimming strategy b. penetration pricing strategy c. status quo pricing strategy d. flexible pricing strategy e. leader pricing strategy
43. WestJet Airlines charges some of the lower prices in the industry. As a result, the airline has been able to reach the mass market and to increase the incidence of air travel among those who might have chosen another means of travel. The company's current price policy would best be described as: a. skimming b. flexible c. penetration d. zone e. absorption
44. Zellers employees regularly shop at Wal-Mart stores in order to make certain that Zellers is charging comparable prices. Kmart is engaging in: a. leader pricing b. status quo pricing c. corporate espionage d. flexible pricing e. functional pricing
45. The Specialty Surgical Practice has published a minimum fee schedule for services, and distributed this schedule throughout the medical profession. Specialty Surgical is guilty of: a. bait pricing b. price fixing c. unfair trade practices d. price discrimination e. predatory pricing 46. The Sharp Razor Company sells its disposable razors to several large discount retailers but gives special allowances only to one retailer. Sharp Razor is practicing: a. bait pricing b. price fixing c. unfair trade practices d. price discrimination e. predatory pricing 47. Price discrimination violates the: a. Laurier Antitrust Act b. Price Discrimination Act c. Wheeler-Lea Amendment d. Competition Act e. Pearson Act
45. The Specialty Surgical Practice has published a minimum fee schedule for services, and distributed this schedule throughout the medical profession. Specialty Surgical is guilty of: a. bait pricing b. price fixing c. unfair trade practices d. price discrimination e. predatory pricing
46. The Sharp Razor Company sells its disposable razors to several large discount retailers but gives special allowances only to one retailer. Sharp Razor is practicing: a. bait pricing b. price fixing c. unfair trade practices d. price discrimination e. predatory pricing
47. Price discrimination violates the: a. Laurier Antitrust Act b. Price Discrimination Act c. Wheeler-Lea Amendment d. Competition Act e. Pearson Act
48. When a customer of Cona Coffee Beans chooses to pay immediately on delivery rather than wait to be billed in thirty days, the salesperson is authorized to offer that customer a 5 percent discount. This 5 percent is an example of a: a. quantity discount b. rebate c. cash discount d. functional discount e. promotional allowance 49. When the salesperson from Ample Appliances calls on retail appliance stores, she is authorized to offer the retailers a 25 percent discount from the list price in recognition of several retailer activities, including appliance unpacking, testing, and floor display setup. This 25 percent is called a: a. functional discount b. promotional allowance c. quantity discount d. seasonal discount e. rebate 50. A sale on water skis and swimsuits at the Alberta-Sunski Store during November is an example of which of the following pricing tactics? a. seasonal discount b. quantity discount c. zone pricing d. promotional allowance e. functional discount 51. The Audria Auto Shop has agreed to set up a special display of Lubri-car motor oils beside the store entrance and also to run an advertisement in the local newspaper. Lubri-car has agreed to supply the display case free of charge and to pay for half the cost of the advertisement. This is an example of a: a. bundled pricing tactic b. promotional allowance c. functional discount d. quantity discount e. product rebate 52. A manufacturer of computer laser printers is offering $100 cash to consumers who buy one of their printers, produces a cash register receipt, a completed certificate, and proof of purchase. This is an example of a(n): a. rebate b. quantity discount c. instant rebate d. functional discount e. promotional allowance 53. Shipping grain to international buyers can be risky because of price changes during the time for shipment, expense incurred over long distances, and quality of product delivered. To minimize exposure, a seller would likely employ: a. freight absorption pricing b. FOB origin pricing c. zone pricing d. basing-point pricing e. uniform delivered pricing 54. The Image Gift mail-order catalogue lists one dollar's worth of shipping charges for every $10 of merchandise purchased. The pricing tactic used is: a. quantity discounting b. uniform delivered pricing c. zone pricing d. freight absorption pricing e. FOB origin pricing 55. Buffington Bookcases sells specialty bookcases and office furniture accessories nationally through its catalogue. The company wants to simplify pricing and reduce its risk. Buffington also desires some type of difference in prices due to distance; therefore, the company uses: a. two-part pricing b. uniform delivered pricing c. freight absorption pricing d. zone pricing e. flexible pricing 56. Ben and Jerry's, Inc., would like to expand distribution of its frozen yogurt to a new market area, but competition is intense. Ben and Jerry's should use the geographic pricing tactic of: a. freight absorption pricing b. zone pricing c. FOB origin pricing d. basing-point pricing e. multiple unit pricing 57. The Mirasha Car Parts Company has eight warehouses and has a pricing policy of charging freight from the closest warehouse to the customer, regardless of where parts are shipped. For instance, if the customer is in Toronto, Ontario, the closest warehouse to the customer is in Windsor. If the ordered car part actually comes from the Quebec warehouse, the customer still pays freight from Windsor. This pricing policy is called: a. FOB origin pricing b. basing-point pricing c. zone pricing d. uniform delivered pricing e. freight absorption pricing 58. The Two-Bit Candy Store is a small retail establishment where all candies are sold for 25 cents per piece, regardless of the candy type or size. This pricing method is known as: a. price lining b. inflexible pricing c. single-price tactic d. price bundling e. leader pricing 59. Yolanda owns a yacht dealership and often will sell essentially the same type of yacht to different customers at very different prices. This policy is: a. two-part pricing b. flexible pricing c. illegal d. bait and switch e. price lining 60. At the Sports Stop, there are tennis rackets priced at $50, $75, $90, $125, and $250. The Sports Stop has chosen this price line structure because it will: a. reach several different target market segments b. maintain the product line at the same stage in the product life cycle c. result in customers determining a price-quality relationship, thus resulting in more sales of the expensive models d. enable the store to carry a larger total inventory e. force competitors out of the market 61. When a local grocery store runs an advertisement for 79-cent cake mixes and watermelon for 29 cents per kilogram, there is a good chance that it is utilizing: a. price bundling b. leader pricing c. price lining d. psychological pricing e. variable pricing 62. Microsoft offers spreadsheet software, word processing software, and graphics software as part of its "Microsoft Office" suite of products. This is an example of: a. price lining b. multi-part pricing c. psychological pricing d. basing-point pricing e. price bundling 63. The U-Storem facility charges a monthly warehouse fee of $25 for each ten-foot-square storage unit. In addition, each time a customer needs to enter the security-locked warehouse to add or remove products, the customer is charged $5. The U-Storem facility is using a pricing tactic known as: a. multiple unit pricing b. variable pricing c. price lining d. two-part pricing e. price bundling
48. When a customer of Cona Coffee Beans chooses to pay immediately on delivery rather than wait to be billed in thirty days, the salesperson is authorized to offer that customer a 5 percent discount. This 5 percent is an example of a: a. quantity discount b. rebate c. cash discount d. functional discount e. promotional allowance
49. When the salesperson from Ample Appliances calls on retail appliance stores, she is authorized to offer the retailers a 25 percent discount from the list price in recognition of several retailer activities, including appliance unpacking, testing, and floor display setup. This 25 percent is called a: a. functional discount b. promotional allowance c. quantity discount d. seasonal discount e. rebate
50. A sale on water skis and swimsuits at the Alberta-Sunski Store during November is an example of which of the following pricing tactics? a. seasonal discount b. quantity discount c. zone pricing d. promotional allowance e. functional discount
51. The Audria Auto Shop has agreed to set up a special display of Lubri-car motor oils beside the store entrance and also to run an advertisement in the local newspaper. Lubri-car has agreed to supply the display case free of charge and to pay for half the cost of the advertisement. This is an example of a: a. bundled pricing tactic b. promotional allowance c. functional discount d. quantity discount e. product rebate
52. A manufacturer of computer laser printers is offering $100 cash to consumers who buy one of their printers, produces a cash register receipt, a completed certificate, and proof of purchase. This is an example of a(n): a. rebate b. quantity discount c. instant rebate d. functional discount e. promotional allowance
53. Shipping grain to international buyers can be risky because of price changes during the time for shipment, expense incurred over long distances, and quality of product delivered. To minimize exposure, a seller would likely employ: a. freight absorption pricing b. FOB origin pricing c. zone pricing d. basing-point pricing e. uniform delivered pricing
54. The Image Gift mail-order catalogue lists one dollar's worth of shipping charges for every $10 of merchandise purchased. The pricing tactic used is: a. quantity discounting b. uniform delivered pricing c. zone pricing d. freight absorption pricing e. FOB origin pricing
55. Buffington Bookcases sells specialty bookcases and office furniture accessories nationally through its catalogue. The company wants to simplify pricing and reduce its risk. Buffington also desires some type of difference in prices due to distance; therefore, the company uses: a. two-part pricing b. uniform delivered pricing c. freight absorption pricing d. zone pricing e. flexible pricing
56. Ben and Jerry's, Inc., would like to expand distribution of its frozen yogurt to a new market area, but competition is intense. Ben and Jerry's should use the geographic pricing tactic of: a. freight absorption pricing b. zone pricing c. FOB origin pricing d. basing-point pricing e. multiple unit pricing
57. The Mirasha Car Parts Company has eight warehouses and has a pricing policy of charging freight from the closest warehouse to the customer, regardless of where parts are shipped. For instance, if the customer is in Toronto, Ontario, the closest warehouse to the customer is in Windsor. If the ordered car part actually comes from the Quebec warehouse, the customer still pays freight from Windsor. This pricing policy is called: a. FOB origin pricing b. basing-point pricing c. zone pricing d. uniform delivered pricing e. freight absorption pricing
58. The Two-Bit Candy Store is a small retail establishment where all candies are sold for 25 cents per piece, regardless of the candy type or size. This pricing method is known as: a. price lining b. inflexible pricing c. single-price tactic d. price bundling e. leader pricing
59. Yolanda owns a yacht dealership and often will sell essentially the same type of yacht to different customers at very different prices. This policy is: a. two-part pricing b. flexible pricing c. illegal d. bait and switch e. price lining
60. At the Sports Stop, there are tennis rackets priced at $50, $75, $90, $125, and $250. The Sports Stop has chosen this price line structure because it will: a. reach several different target market segments b. maintain the product line at the same stage in the product life cycle c. result in customers determining a price-quality relationship, thus resulting in more sales of the expensive models d. enable the store to carry a larger total inventory e. force competitors out of the market
61. When a local grocery store runs an advertisement for 79-cent cake mixes and watermelon for 29 cents per kilogram, there is a good chance that it is utilizing: a. price bundling b. leader pricing c. price lining d. psychological pricing e. variable pricing
62. Microsoft offers spreadsheet software, word processing software, and graphics software as part of its "Microsoft Office" suite of products. This is an example of: a. price lining b. multi-part pricing c. psychological pricing d. basing-point pricing e. price bundling
63. The U-Storem facility charges a monthly warehouse fee of $25 for each ten-foot-square storage unit. In addition, each time a customer needs to enter the security-locked warehouse to add or remove products, the customer is charged $5. The U-Storem facility is using a pricing tactic known as: a. multiple unit pricing b. variable pricing c. price lining d. two-part pricing e. price bundling
