Revision Test

1. Generally speaking, international trade results in:

• A) lower prices for goods.

• B) higher prices for goods.

• C) stabilizing prices.

• D) high inflation rate.

2. The price of a six-pack of Heineken varies in price by as much as 50 percent depending on where it is sold due to all of the factors except:

• A) purchasing power parity.

• B) transportation costs.

• C) transaction costs.

• D) promotion.

3. If the manufacturer of a sophisticated new consumer electronics product determines that many target consumers qualify as "innovators" and "early adopters" with relatively inelastic demand curves, the company should use the ________ pricing strategy.

• A) gray market

• B) skimming

• C) penetration

• D) market holding

4. A market ________ pricing strategy calls for setting price levels that are low enough to quickly build market share.

• A) gray

• B) skimming

• C) penetration

• D) holding

5. Mexican customers generally carry small coins. To keep prices of shampoo and detergent below 11 or 12 pesos, Procter & Gamble is using which method of pricing?

• A) price bundling

• B) target costing

• C) cost-plus approach

• D) export price costing

6. Which pricing strategy has the advantage of being simple to calculate but has the disadvantage of ignoring demand and competitive conditions?

• A) gray marketing

• B) skimming

• C) penetration

• D) cost-based

7. A manufacturer attempting to set prices for its products in export markets must realize that CIF, VAT, and distributor markup all lead to:

• A) currency devaluations.

• B) dumping charges.

• C) market skimming.

• D) price escalation.

8. When Sony introduced the first consumer VCRs in the 1970s, the retail price exceeded $1,000. Within a few years, the price dropped well below $500. This is an example of:

• A) skimming strategy.

• B) penetration strategy.

• C) cost-based strategy.

• D) price ceiling strategy.

9. Which of the following does not contribute to price escalation in global marketing?

• A) shipping and insurance charges

• B) value added taxes (VAT)

• C) different Incoterms as incentives

• D) duties and tariffs

10. Suppose a company selling in various country markets makes statements such as "we know what the customer wants, and he or she will have to pay for it." This is an indication of a(n) ________ approach to setting prices.

• A) ethnocentric

• B) polycentric

• C) regiocentric

• D) geocentric