CH. 19 pricing concepts

Which of the following statements about price as an element of the marketing mix is true?

• The development of the price and pricing-related objectives involves a long-term commitment and, once set, is rarely changed.

• Developing the price for a product or service is a lengthy process and is very inflexible.

• Price has limited effects on a firm’s sales and profitability.

• The pricing element of the marketing mix is very flexible, and marketers can quickly respond to changes in demand or competitors’ actions.

Which of the following mathematical expressions is true about pricing and the generation of a firm’s revenue?

• profit= (price x quantity sold)- total cost

• profit= price x quantity sold

• Total costs= price x quantity sold

• Revenue= quantity sold - total costs

In conducting an assessment of her accounting firm, Paige discovers the following annual results: average charge per customer = $250; rent = $12,000; total billings = $150,000; employee compensation and benefits = $60,000; and other costs = $110,000. Given these results, Paige's profits would equal _______.

• $40,000

• $28,000

• a loss of $32,000

• a loss of $20,000

_______ occurs when a marketer utilizes distinctive product features, service, product quality, promotion, packaging, or other factors to differentiate its products or services from their competitors.

• Nonprice competition

• Differential competition

• Price competition

• Monopolistic competition

Sherman’s is a family-owned furniture and appliance retailer with four locations in central Illinois. The business is family-owned and is now run by the son of the founder. Sherman’s frequently uses television advertising and social media to promote the business and recently began offering a price match guarantee. The company is encouraging customers to check competitor prices while shopping at Sherman’s and will even offer customers the use of an iPad to check deals. Sherman’s will meet or beat any advertised competitor’s price on similar merchandise. What type of practice is Sherman’s implementing through its price-match guarantee?

• integrated pricing

• Price competition

• Nonprice competition

• Value-conscious pricing

If an inverse relationship exists between a product’s price and the quantity of the item demanded, the demand is described as _______.

• unknown

• elastic

• inelastic

• unitary

Louis Vuitton is a fashion brand often associated with elite or high-profile customers who can afford to spend $1,000 or more on a purse. One of its most popular handbags is the Alma, which is a structured bag and part of the Monogram collection. Louis Vuitton closely monitors its sales and wanted to test the elasticity of demand. It noticed that when the Alma bag was priced at $1,500, a greater number were sold compared to a retail price of $1,300. However, if the price was $1,750, sales of the bag declined. The pricing research conducted by Louis Vuitton demonstrates that the Alma bag is a _______ product.

• standard

• reverse-demand

• convenience

• 
  

  prestige

The mathematical result of dividing the percentage change in quantity demanded by the percentage change in price is known as the _______.

• average variable cost

• marginal revenue

• price elasticity of demand

• marginal cost

Back2Nature produces granola bars and protein snacks geared toward hikers and people who spend a lot of time outside. The company announced it would increase product quality by using cage-free eggs and whole grains in its products moving forward. We may expect to see the demand curve to _______.

• shift to the left

• shift to the right

• become curved, like a demand curve for prestige products

• remain the same

Rex is opening a retail outlet and will primarily sell used video games and game systems. Which of the following would most likely represent a fixed cost for Rex?

• Employee compensation

• Advertising expenditures

• Building rent

• Electricity