Principles of Pricing and Market Dynamics Quiz

WF Marketing Lap 3 Make Cents Post Test 1. Erica wants to buy Marco’s used iPod. He is asking her to pay him $100 for it. $100 is the iPod’s a. cost of goods. c. cash flow. b. selling price. d. profit. 2. Which of the following is a true statement: (4 points) a. Only certain types of products have selling prices. b. Selling prices are easy for businesses to determine. c. Selling prices for products remain the same over time. d. There are many kinds of selling prices for goods and services. 3. Which of the following is not something a business must accomplish through selling price: (4 points) a. Maintain market share c. Pay all operating expenses b. Pay all costs of the product d. Obtain a profit 4. The selling prices of products help customers to (4 points) a. make buying decisions. c. spend freely. b. compare different kinds of products. d. determine the amount of mark-up. 5. Selling price helps customers to allocate their money because price determines (4 points) a. what customers need to purchase. c. the quality of all goods and services. b. the value of products to all purchasers. d. what customers can afford to purchase. 6. It costs a publishing company $8 to produce a paperback book. The company sells each paperback it produces for $9.99. The $1.99 difference is known as (4 points) a. capital. c. demand. b. mark-up. d. elasticity. 7. Is the following statement true or false: There is no connection between a firm’s marketing objectives and its pricing objectives: (4 points) a. True; marketing and pricing are independent of each other. b. False; marketing objectives are based on pricing objectives. c. True; some businesses do not even need marketing objectives. d. False; pricing objectives should be used to achieve marketing objectives. 8. Which of the following is true of a business’s pricing objectives: (4 points) a. They must be changed each fiscal year. b. They must be adjusted from time to time. c. They are chosen for the life of the business. d. They are not affected by changing circumstances. 9. A business that uses sales-oriented pricing objectives wants to increase the (4 points) a. cost of its marketing efforts. c. amount of promotion it uses. b. total amount of its income from sales. d. inefficiency of its human resources. 10. A business that sets its prices lower than those of competitors will not make a profit unless it also a. reduces its inventory. c. controls its costs. b. increases promotion. d. enlarges its staff. 11. Why is obtaining, maintaining, or increasing market share important to a business? (4 points) a. A large market share ensures large profits. b. Customers are interested in a firm’s market share. c. Market share serves as a measure of the success of the business. d. Market share must constantly increase for the business to succeed. 12. The majority of businesses that use profit-oriented pricing want to (4 points) a. earn a reasonable amount of profit. c. reduce their return on investment. b. make as much profit as possible. d. create a negative cash flow. 13. The objective of pricing that is intended to earn a certain percentage of profit based on the amount of money that has been put into the business is (4 points) a. percentage pricing. c. return on sales. b. unfair trade practices. d. return on investment. 14. Businesses that come under government control often set a target return of profit because they a. need to earn very high profits. c. are not allowed to earn a reasonable profit. b. must abide by unfair trade practices. d. may be investigated if they earn high profits. 15. Why is it important for businesses to recover their costs? (4 points) a. So that they can pay lower taxes c. So that they can maximize their losses b. So that they can stay in business d. So that they can avoid government regulation 16. What happens when demand for a product goes up? (4 points) a. The selling price goes up. c. Producers make more of it. b. Customers can’t afford to buy it. d. The supply decreases. 17. The national economy is always changing. These ups and downs in economic activity are known as a. growth periods. c. profit cycles. b. business cycles. d. recessions. 18. What kind of competitive market is characterized by a great many buyers and sellers of nearly identical products and marketers who have little control over pricing? (4 points) a. Monopolistic competition c. Pure competition b. Monopoly d. Oligopoly 19. In what type of market do companies compete by making their products different from each other as to quality, service, styles, and prices? (4 points) a. Pure competition c. Oligopoly b. Monopolistic competition d. Monopoly 20. In which of the following forms of competition are no substitutes readily available? (4 points) a. Pure competition c. Oligopoly b. Monopolistic competition d. Pure monopoly 21. Which of the following is prohibited by government regulation: (4 points) a. Businesses that avoid agreeing on a price range for a product b. Businesses that offer premiums without explaining the terms to the customer c. Businesses that show the price per unit along with the total price of the item d. Businesses that charge the same price to similar customers in similar situations 22. Jack’s General Store has advertised a big sale on toasters. When Wendy goes to the store to buy a toaster, the salesperson tells her they are all sold out and offers to sell her a higher priced toaster oven. This is an example of an illegal practice known as (4 points) a. bait-and-switch advertising. c. price fixing. b. unit pricing. d. price discrimination. 23. If a producer priced its products much lower than those offered by competitors, is it possible that the producer would lose customers: (4 points) a. Yes; channel members avoid buying from the lowest priced producer. b. No; customers will buy from the producer offering the lowest price. c. No; channel members seldom change vendors when they’re getting the lowest price. d. Yes; the price may be so low that the producer is unable to perform certain duties. 24. Which of the following factors related to a business’s objectives and strategies affects its pricing: a. Product mix c. Fixed costs b. Channel members d. Supply 25. Most marketers feel that it is a good strategy to price their products according to the (4 points) a. sale of loss leaders. b. agreements set with other channel members. c. manufacturer’s list price. d. way their customers view the products.