Chapter 13: The Marketing Mix Price

In a free market, prices are determined by:

• supply and wants
• demand and output
• demand and supply
• supply and needs.

When the price of most products increases, the demand for these products will be likely to:

• fall
• increase
• stay the same
• increase and then remain constant.

The demand for Coke is most likely to be affected by which of the following changes?

• the price of Pepsi-Cola
• the supply of Coca-Cola
• the cost of producing Coca-Cola
• an increase in incomes of people who do not buy Coca-Cola

The price for a product rises 10%, product demand falls by a smaller proportion, which is true?

• The supply of the product is inelastic.
• Competitors have lowered their prices.
• Demand for the product is inelastic.
• Demand for the product is elastic.

The price of a product rises by 5% and the market supply rises by 20%. Which is true?

• Demand for the product is elastic.
• Supply is inelastic.
• Firms have been unable to increase output.
• Supply is elastic.

When demand and supply are equal in a free market, which of the following is true?

• The price is at its equilibrium level.
• Price skimming is being used.
• Supply and demand are both elastic.
• Cost-plus pricing is being used.

A firm is most likely to adopt a low price (penetration) strategy for a product when:

• sales are increasing rapidly
• competitors have just raised their prices
• the objective is to achieve a high market share
• the firm wants to establish a luxury image for the product.

The cost of making 1000 units is $500. What is the price if a profit mark-up of 50% is added?

• $1
• 50 cents
• $3
• 75 cents

A firm aiming to create a luxury, quality clothes product image will use which pricing strategy

• price penetration
• price skimming
• competitive pricing
• cost-plus pricing.

A shop has chairs that have been in stock for over a year. To sell them quickly it will use:

• promotional pricing
• price skimming
• equilibrium price