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Exam 16: Pricing Concepts

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Question 31

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Tom likes to drink scotch whiskey.He was familiar with the Johnny Walker brand,which he purchased for around $30.When he found a bottle of Johnny Walker Black Label priced at more than $200,he was positive that it would be a much finer whiskey.For Tom,what indicated quality?

A) selective pricing
B) premium pricing
C) exclusive pricing
D) prestige pricing

E) B) and C)
F) A) and D)

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Question 32

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Price is defined as the perceived value of a good or service that is exchanged for a certain dollar amount.

A) True
B) False

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Question 33

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Firms that price their products solely on the basis of costs are adhering to the marketing concept.

Many consumers,especially when faced with an uncertain purchase decision,think which of the following?

Which of the following is most likely to be a variable cost for a manufacturer of amusement park rides?

How can manufacturers regain some control over the price their products are sold for at the retail level?

Which of the following describes a disadvantage associated with markup pricing?

What is a break-even point? The Catera Company makes and sells cotton candy machines.What is the break-even volume for Catera machines in units? $\begin{array}{c}\text { Catera Machines Finareial information }\\\begin{array} { l r } \text { Salespersan salary } & \$ 50,000 \\\text { Advertising } & 80,000 \\\text { Research and development } & 30,000 \\\text { Production equipment } & 15,000 \\\text { Overhead allocation } &\underline{ 15,000 }\\\\\text { Total fixed costs } & \$ 190,000 \\\\\text { Catera' s selling price } & \$ 600 \\\text { Variable cast } & \$ 400\end{array}\end{array}$

The Pizza Depot is an independent retailer of pizzas and deli sandwiches.Which of the following is the BEST example of one of its fixed costs?

When is demand inelastic?

Deco Furniture sells reproductions of furniture and collectibles that were seen during the early part of the 20th century.The store's owner does not take into account competition when pricing the store's merchandise.The markup on all items in the store is 100 percent over cost (or double the cost) .What is Deco Furniture using?

A marketers using a profit maximization strategy will charge the highest prices the market will bear.

As products enter the growth stage of the product life cycle,prices generally begin to fluctuate wildly.

Sara Lee Crustless bread designed for making sandwiches is a product in the introductory stage of its product life cycle.If management at Sara Lee is typical,its pricing strategy will depend on the elasticity of demand for the crustless bread.

At her local supermarket,TJ saw a pizza pan and a package of mix to make homemade pizza.The items,which were sold together,retailed at $28.50,but were marked down to $19.99. -Refer to Pizza.The retailer sold one item for $28.50 and five items at $19.99.What is the retailer's revenue?

Imagine you're planning an after-symphony fund-raising party,and you need a life-size grand piano cake.Or you are a developer proposing a new shopping centre to a group of investors,and you want to serve a cake shaped like an architectural rendition of the centre.Is this impossible? No,you just need to contact Cecilia Villaveces Cakes.She actually built a life-size grand piano cake for a gala in Toronto.You can expect to pay anywhere from $75 to $10,000 for one of Cecilia's creations,depending on complexity of design and size.She uses only the best ingredients,and no two cakes are ever quite alike. -Refer to Specialty Cakes.Which of the following is the BEST example of a variable cost for Cecilia Villaveces Cakes?

Why are marketing managers finding it more difficult to set prices in today's environment?

The daily demand for bottled water is 35 bottles when the price is set at $1.However,if the price is raised to $5,the demand is only 5 bottles.The bottled water producer is willing to supply 40 bottles if the price is set at $5 per bottle,but will supply only 10 bottles if the price is set at $2.Draw the supply and demand curves for the water bottles on the graph below.Label each curve and each axis.At what level does equilibrium occur? What are the areas of surplus and shortage?

Which of the following BEST describes selling against the brand?

An office supply store can buy an office chair for $30.If the store owner sells the office chair for $45,what is the markup based on the selling price?