Chapter 4

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Question #1

What is the name for an agreement whereby businesses agree to advertise one another’s offerings?

A mutual agreement

B joint agreement

C reciprocal agreement

Question #2

What is the name for the pricing adjustment in which the buyer pays shipping charges?

A FOB (free on board) destination

B FOB (free on board) transportation

C FOB (free on board) origin

Question #3

Which pricing strategy allows customers to break down product payments into smaller increments?

A price skimming

B captive pricing

C payment pricing

Question #4

Which pricing strategy pressures consumers to buy a given product because they are at a certain event or location?

A product mix pricing

B prestige pricing

C captive pricing

Question #5

McDonald’s frequently sells multiple offerings together for cheaper than the price of each individual offering. What is the term for this pricing approach?

A price bundling

B captive pricing

C going-rate pricing

Question #6

What is a forward auction?

A when a buyer lists an item they want to purchase and sellers enter bids at various prices

B when a buyer lists an item they want, along with what they will pay for it, and a seller accepts the price

C when a seller lists an item for sale and buyers negotiate with each other over the price

Question #7

Nash’s Office Supplies offers reams of printer paper for a very low price to get customers into their stores. Nash hopes that these customers will buy its other products too. Which of the following explains Nash’s pricing strategy?

A prestige pricing

B markdown pricing

C leader pricing

Question #8

Which of these choices accurately describes the concept of price lining?

A charging very low prices to get people into a store

B grouping of a similar line of products at a few different price levels

C pricing a line of products at the same price level

Question #9

What is the name for the amount of money taken off the price of a product?

A markup

B markout

C markdown

Question #10

Which of the following products would fit with a premium pricing strategy?

A a standard vacuum cleaner

B a pack of cotton T-shirts

C a one-of-a-kind perfume

Question #11

What is the goal of using a penetration pricing strategy?

A to match competitors’ price changes as they occur

B to start out with a high price and then lower it as competitors enter the market

C to get as much of the market as possible to try the product

Question #12

Which consumers are targeted by the skimming price strategy?

A consumers who research all their options before buying a product

B consumers who are budget-conscious but want high-quality products

C consumers who will pay a high price right when a product is released

Question #13

According to the chart, what percentage of consumers are willing to pay more for breakfast options that are made with no artificial ingredients?

A 24 percent

B 40 percent

C 44 percent

Question #14

Why would labels and packaging be considered a variable cost?

A because the price for labels and packaging is always the same

B because the price for labels and packaging is not known

C because the price for labels and packaging could change

Question #15

Which of these refers to costs that a company must pay regardless of its level of production or level of sales?

A total costs

B fixed costs

C variable costs

Question #16

City Mattress Company advertises a special $100 mattress deal. When customers arrive, they find that they can only purchase the $100 mattress in a bundle with other items, bringing the total cost to $500. What is this an example of?

A predatory pricing

B bait-and-switch pricing

C price fixing

Question #17

Why is Crandall’s suggestion an example of price fixing?

A because it would involve two companies agreeing to charge the same price

B because it would involve two companies earning money from their sales

C because it would involve two companies competing to win over customers

Question #18

What does the Robinson-Patman Act limit?

A price competition

B price discrimination

C price fixing

Question #19

Why do companies match their competitors’ prices?

A to keep customers

B to make sure their prices are legal

C to maintain a relationship with competitors

Question #20

Which of the following products is price elastic?

A a pack of diapers

B a laptop computer

C a loaf of bread

Question #21

Which of these refers to the people’s sensitivity to price changes?

A price elasticity

B price inelasticity

C price sensitivity

Question #22

The Galder Corporation is struggling financially and has decided to temporarily cut prices on its offerings to its price-sensitive target market to help pay off some of its financial debts in the short-term. Which pricing objective are they using?

A maximizing market share

B maximizing sales

C maximizing profits

Question #23

What do consumers need to perceive to pay a high price for a product?

A Consumers need to perceive that the product has a high degree of value.

B Consumers need to perceive that the price is fair.

C Consumers need to perceive that they will get a good return on their investment.

Question #24

How do companies typically set ROI for a product’s first year on the market?

A They set ROI at a certain percentage.

B They set ROI only at 5 percent.

C They set ROI to return the full cost of the investment.

Question #25

What is the first step of the pricing framework?

A Determine costs.

B Estimate demand.

C Set pricing objectives.

Question #26

What should the Price, Product, Promotion, and Place of a good or service always be?

A unpredictable

B consistent

C different

Question #27

How is Price unique among the 4 Ps of marketing?

A It focuses on the content of advertising.

B It costs the company money.

C It generates income for the company.

Question #28

What should be foremost in the mind of the marketer when establishing a pricing strategy?

A desired profit

B consumers’ preferences

C competitors’ prices

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