Lesson 15: Ethics Surrounding Pricing Strategies

Bob’s Computer Store has many different types of computers for consumers' varying budgets. A customer can purchase a desktop computer for a few hundred dollars or a laptop computer for a little bit more of a cost. The higher the price of the computer, the more features it comes with. This is an example of

• product line pricing.

• product bundling pricing.

• two-part pricing.

• captive pricing.

Mobile Express charges a fixed rate for cell phone minutes, text messages, and data packages. If you exceed your allotted minutes, Mobile Express will include an additional charge for the extra minutes used on your bill. What type of pricing strategy is Mobile Express using?

• product line pricing

• product bundling pricing

• two-part pricing

• captive pricing

Both National Electronics and Big Buy Electronics are two major electronics stores that offer competitive prices for washing machines. Recently, National Electronics lowered their price because they received double the shipment of washing machines and need to get rid of inventory. What should Big Buy Electronics do to stay competitive?

• Buy some of the washing machines from National Electronics.

• Bundle a washer and dryer and market to customers.

• Raise their prices on washing machines.

• Lower their prices on washing machines.

What is one of the reasons why a company would raise prices on a product?

• A company may raise prices if there was an influx of the same product on the market.

• A company may raise prices if there was an increase in the cost to make the product.

• A company may raise prices if the product is not selling.

• A company may raise prices if it is going out of business.

A company’s manufacturing plant is located in Sacramento, California. After the products are made, they are shipped to stores across the country. Why would the price in a store in Portland, Maine, be higher than the price for the same product in a store in San Francisco, California? Think about the information given in the question and choose the best answer.

• The product costs more in Portland, Maine, because there is a higher need for it there.

• The store in San Francisco is geographically closer to the manufacturing plant, so there is less shipping cost included in the price.

• The store in Portland, Maine, is geographically closer to the manufacturing plant, so there is less shipping cost included in the price.

• The product costs less in San Francisco because there is not a market for it.

Styles Department Store is located on one end of a shopping mall and Taylor’s Threads is located on the other side of the mall. Both stores have the same black leather jacket on sale. Styles Department Store has priced the jacket at $149.98, and the same jacket is priced at $150.00 at Taylor’s Threads. Even though there is only a two cent difference, Styles Department Store has sold 30% more jackets than Taylor’s Threads. What type of pricing strategy is Styles Department Store using?

• reference pricing strategy

• price lining strategy

• fair price strategy

• odd pricing strategy

At Monroe State University, enrolled students can live on-campus in a dorm or off-campus in a house. The university is located in a very small mountain town and there is not a variety of other housing options other than the rental homes in town. The rental property owners had a meeting and decided to charge the same amount of money for rent that the university charges for room and board. What type of pricing strategy are the rental owners using?

• price fixing

• predatory pricing

• price discrimination

• bait-and-switch tactics

What act prohibits wholesalers and retailers from pricing products below cost?

• the Robinson-Patman Act

• the Unfair Sales Act

• Antitrust Act

• the Consumer Goods Pricing Act of 1976

What type of pricing strategy involves consumers making a judgment about a product and its quality based on its price compared with a similar product?

• reference pricing strategy

• price lining strategy

• fair price strategy

• odd pricing strategy

What type of pricing strategy leaves customers happy because they get multiple products each at a lower price than if they had to pay for the products individually?

• two-part pricing

• product-line pricing

• captive pricing

• product-bundling pricing