c. product development theory.
d. demand-curve theorem.
30. When a company reviews sales, costs, and profit projections for a new product to find
out whether these factors satisfy the company’s objectives, they are in which of the
following new-product development stages?
a. concept development and testing
b. commercialization
C. business analysis
d. marketing strategy development
CHAPTER 10
PRICING PRODUCTS: PRICING CONSIDERATIONS
AND STRATEGIES
1. ____________ is the amount of money charged for a product or service.
A. Price
b. Accountancy
c. Demand
d. Value
2. _____________ is the sum of the values that consumers exchange for the benefits of
having or using the product or service.
A. Price
b. Elasticity
c. Demand
d. Value estimate
3. Throughout most of history, prices were set by ____________.
a. fixed-price policies constructed by sellers
B. negotiation between buyers and sellers
c. governments and regulatory agencies
d. ruling monarchs
4. A ____________ policy means that a firm sets one price for all buyers in a given
product or service line.
A. fixed-price
b. variable-price
c. dynamic-price
d. standard-price
5. Which of the following factors is spurring a new movement in pricing toward
dynamic pricing?
a. the federal government
B. strong retailers
c. the Internet
d. strong wholesalers
6. ____________ is the practice of charging different prices depending on individual
customers and situations.
a. Fixed-pricing
b. Standard-pricing
c. Barter-pricing
D. Dynamic pricing
7. _______ is the only element of the marketing mix that produces revenue.
a. Product
B. Price
c. Place (distribution)
d. Promotion
8. All of the following are among the internal factors that affect pricing EXCEPT:
(Pick the LEAST LIKELY.)
A. globalization.
b. the company’s marketing objectives.
c. marketing mix strategy.
d. the organization.
9. Before setting price, the company must decide on its strategy for:
a. distribution.
b. promotion.
c. the environment.
D. the product.
10. Companies set ______________ as their major objective if they are troubled by too
much capacity, heavy competition, or changing consumer wants.
a. current profit maximization
B. survival
c. market share leadership
d. product quality leadership
11. Pricing to cover variable costs and some fixed costs, as in the case of some
automobile distributorships that sell below total costs, is typical of which of the
following pricing objectives?
a. current profit maximization
b. product quality leadership
c. market share leadership
D. survival
12. Choosing a price based upon its short-term effect on current profit, cash flow, or
return on investment reflects which of the following pricing objectives?
A. current profit maximization
b. product quality leadership
c. market share leadership
d. survival
13. If a company believes that the company with the largest market share will enjoy the
lowest costs and highest long-run profits, that company will probably choose which
of the following pricing objectives as their primary course of action?
a. current profit maximization
b. product quality leadership
C. market share leadership
d. survival
14. The Samuels Company, a company that makes performance racecars for dirt
tracks, charges high prices to cover higher performance quality and the high
cost of R&D necessary to stay on top of the performance racing field. Which
of the following pricing objectives would the Samuels Company most likely be
following as a course of action?
a. current profit maximization
b. product quality leadership
C. market share leadership
d. survival
15. When a company sets a price for a new product on the basis of what it thinks the
product should cost, then develops estimates on what each component should cost to
meet the proposed price with an acceptable profit margin, the company is practicing:
a. predatory pricing.
B. target costing.
c. strategic pricing.
d. low cost leadership.
16. ______________ set(s) the floor for the price that the company can charge for its
product.
a. Supply
b. Demand
C. Costs
d. Nonprofit factors
17. Companies with ___________ can set lower prices that result in greater sales and
profits.
a. lower market share percentages
b. higher costs
C. lower costs
d. larger supply ratios
18. Costs that do not vary with production or sales levels are called:
A. fixed costs.
b. variable costs.
c. standard costs.
d. independent costs.
19. Another term for fixed costs is:
a. standard costs.
B. overhead.
c. independent costs.
d. “the bottom line.”
20. Costs that vary directly with the level of production are called:
a. fixed costs.
B. variable costs.
c. standard costs.
d. independent costs.
21. In industries such as aerospace, steel, railroads, and oil, companies often have a
_____________ to set the prices or to help others in setting them.
a. Vice-President of Pricing
b. Pricing Board
C. Pricing Department
d. PFO (Pricing and Financial Officer)
22. The type of market that consists of many buyers and sellers trading in a uniform
commodity such as wheat or copper is called:
A. pure competition.
b. monopolistic competition.
c. oligopolistic competition.
d. pure monopoly.
23. The type of market in which no single buyer or seller has much effect on determining
the going market price is called:
A. pure competition.
b. monopolistic competition.
c. oligopolistic competition.
d. pure monopoly.
24. The type of market that consists of many buyers and sellers who trade over a range
of prices rather than a single market price is called:
a. pure competition.
