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Exam 13: Building the Price Foundation

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Question 101

Multiple Choice

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In a snack vending machine, consumers can select one of many choices. These snacks are

A) an ideal example of unitary demand.
B) likely to have a price elasticity equal to 1.
C) more likely to be price elastic.
D) likely to have a price elasticity less than 1.
E) more likely to be price inelastic.

F) A) and B)
G) C) and D)

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Question 102

Multiple Choice

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Which of these is a typical example of a fixed cost?

A) taxes
B) raw materials
C) sales commissions
D) executive salaries
E) hourly wages

F) A) and D)
G) D) and E)

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Question 103

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Figure 13-6 -The owner of a picture frame store has generated a spreadsheet of several calculations based on different quantity, price, revenue, cost, and profit scenarios shown in Figure 13-6 above. What is the break-even point quantity for her picture frame store?

An analysis of a prospective product shows that sales for it are expected to grow by at least 10 percent each year over the next five years before it enters the maturity phase of its product life cycle. This type of analysis would provide useful information in which step of the price-setting process?

Price is

A demand curve graph typically appears as

________ = (Unit price × Quantity sold) − Total cost.

A negative aspect of selecting unit volume as a pricing objective is that

Tara is enrolled for spring semester at college. The tuition is $6,000, but she has a scholarship for $1,000 as well as a work-study grant of $1,500. The health fees and student activity fees are $150 for the semester. What is the final price that Tara will pay for the spring semester?

Ampro-Mag makes materials for safely controlling hazardous spills of all kinds. It sells these items as a neutralizing kit priced at $100. The costs of the materials that go into each kit are $45. It costs $5 in labor to assemble a kit. The company has monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising in trade journals, and $3,500 for the monthly salary of its owner. What is Ampro-Mag's monthly break-even point in terms of number of neutralizing kits sold?

Competitors' prices are important only if a prospective buyer knows about those prices and

Assuming there is no change in a product's price or the quantity demanded, if a business owner wants to increase her advertising expenses by $500 monthly, this would cause total costs to ________ and the break-even quantity to

A firm's profit objective is often measured in terms of ROI. The acronym ROI stands for

A common pricing tactic today is the use of special fees and surcharges that add to a list price, a response to consumers' zeal for ________ combined with the ease of making price comparisons on the Internet.

Which of these would be an example of an objective in Step 1 of the price-setting process?

Figure 13-7B -The break-even chart for a picture frame store in Figure 13-7 above shows that by selling 800 pictures, the store will

Florida Power & Light, an electric power company, is the only source of electricity for consumers in most parts of the Florida panhandle. The company is ________, despite the fact that it must seek approval from the state utility commission for the rates it can charge.

Three different pricing objectives relate to a firm's profit. One objective, known as ________, occurs when a firm sets a profit goal, usually determined by its board of directors.

The ratio of perceived benefits to ________ is referred to as value.

If competitive market circumstances are such that there are few sellers who are sensitive to each other's prices, and the purpose of advertising is to inform but avoid price competition, then ________ must exist in the industry.