PG MA CH 13

1) As a general rule of economics, companies should only produce and sell units as long as

• A) there is customer demand for the product

• B) there is a relatively small supply of the product when compared to past operating periods

• C) the revenue from an additional unit exceeds the cost of producing it

• D) there is a generous supply of low-cost direct materials

2) In setting prices for products and services, managers may attempt to charge what the customer is willing to pay however, too high a price may ________.

• A) deter a customer from purchasing a product and seek alternatives

• B) increase demand and demand for the product

• C) indicate supply is too plentiful

• D) decrease a competitor's market share

3) Companies must always examine their pricing ________.

• A) based on the supply of the product

• B) based on the full cost of producing the product and price to make a profit

• C) through the eyes of their customers and then manage costs to produce a profit

• D) based on the GAAP cost of producing the product and then add a mark-up

4) Which of the following statements is true about the factors that affect pricing decisions?

• A) Information about competitors' technologies is not useful for pricing decisions.

• B) Information about a competitor in a perfect market affects pricing decisions

• C) Increase in price of a substitute product does not affect pricing decisions.

• D) Managers must always be aware of the competition when pricing their products

5) In a perfectly competitive market, which of the following is a primary factor influencing pricing decisions?

• A) cost of production

• B) availability of raw materials in the market

• C) information on competitor's cost structure

• D) value customers place on product

6) Which of the following statements is true of the cost of producing a product?

• A) It controls pricing in highly competitive markets.

• B) It affects the willingness of a company to supply a product

• C) It includes manufacturing costs, but not product design costs for pricing decisions.

• D) It is not a factor to be taken into account while pricing a product.

7) In a noncompetitive environment, the key factor affecting pricing decisions is the ________.

• A) customer's willingness to pay

• B) price charged for alternative products

• C) information on competitor's cost structure

• D) minimum price acceptable to the firm

8) Which of the following statements is true of costs and pricing decisions?

• A) Companies get profit from selling products only when they are the price makers

• B) Companies supply products as long as the price the customer is willing to pay for its products exceeds the price that is charged by the competitor.

• C) Companies supply products as long as there is a demand for the product in the market regardless of the price at which the products are sold.

• D) Companies supply products as long as the revenues from selling the additional units exceed the cost of producing them.

9) Three major influences on pricing decisions are ________.

• A) competition, costs, and customers

• B) competition, demand, and production efficiency

• C) continuous improvement, customer satisfaction, and supply

• D) variable costs, fixed costs, and mixed costs

13.2(1) Which of the following examples would have as its purpose the allocation of costs to motivate employees?

• A) deciding on a selling g price for a product

• B) encouraging sales representatives to emphasize high-margin products

• C) to cost products a a "fair" price under a government contract

• t D) to cost inventories for reporting to external parties