Question 1

The most common pricing mistake small business owners make is setting the price for the products and services they sell too high.

Accepted Answer

A) True 
 B)False

Question 2

The manufacturer's suggested price takes into account the small firm's cost structure and its competitive situation.

Accepted Answer

A) True 
 B)False

Question 3

The interchange fee is a bank charge that retailers pay whenever customers use a credit or a debit card to pay for a purchase.

Accepted Answer

A) True 
 B)False

Question 4

One of the requirements to be able to offer ________ is to make certain that the firms' cash position is ________.

Accepted Answer

A)  installment credit; positive
B)  installment credit; strong enough to support the additional pressure
C)  trade credit; positive
D)  trade credit; strong enough to support the additional pressure

Question 5

Ultimately,the "right" price for a product or service depends on one factor:

Accepted Answer

A)  the lowest price possible.
B)  premium prices.
C)  the value that it provides for a customer.
D)  the most effective advertising campaign.

Question 6

Without the advantage of a unique business image,a small business must match local competitors' prices or risk losing sales and customers.

Accepted Answer

A) True 
 B)False

Question 7

Small companies have three options for selling to customers on credit:

Accepted Answer

A)  credit cards,manufacturer credit,and trade credit.
B)  credit cards,installment credit,and trade credit.
C)  credit cards,installment credit,and poor credit.
D)  debit cards,installment credit,and trade credit.

Question 8

If Miller desires a profit of $120,000,what price should she set?

Accepted Answer

The answer of If Miller desires a profit of $120,000,what...

Question 9

One of the most important determinants of customers' response to a price is whether they perceive the price to be a fair exchange:

Accepted Answer

A)  compared to what they have paid in the past.
B)  regardless of their actual experience with the product.
C)  based on their expectation,not reality.
D)  for the value they receive from the product or service.

Question 10

________ is the difference between the cost of a product or service and its selling price.

Accepted Answer

A)  Markup
B)  Break-even price
C)  Contribution margin
D)  Absorption costing

Question 11

One key to setting prices properly is based on understanding a company's:

Accepted Answer

A)  buying power.
B)  competitive position.
C)  target market.
D)  cost structure.

Question 12

An MP3 player is sold at a price close to the break even point,but the accessories for the product are priced at a premium,offer impressive contribution margins.This is an example of:

Accepted Answer

A)  byproduct pricing.
B)  bundling.
C)  captive-product pricing.
D)  multiple-unit pricing.

Question 13

How would Penny Matthews go about determining how to price the services her business plans to offer?

Accepted Answer

This case addresses the issue of establi...

Question 14

Which of the following is/are not true regarding pricing for service firms?

Accepted Answer

A)  A service firm must establish a price based on the materials used to provide the service,the labor employed,an allowance for overhead,and a profit.
B)  Most service firms base their prices on an hourly rate usually actual hours,but sometimes standard hours are used.
C)  For most service firms,labor and profit comprise the largest portion of the cost of the service.
D)  None of the above

Question 15

Which of the following statements about price is true?

Accepted Answer

A)  Price measures what the customer must exchange to obtain goods and services in the marketplace.
B)  Target market,business image,and price are closely related.
C)  For most goods and services,there is an acceptable price range and not a single "ideal price."
D)  All of the above

Question 16

A common pricing mistake entrepreneurs make is lowering prices because they fail to recognize the:

Accepted Answer

A)  extra value,convenience,service,and quality they offer their customers.
B)  advantages they have due to their lower cost structure.
C)  complexities that larger competitors have to face.
D)  driving need that all customers have to find the lowest price possible.

Question 17

The best way to survive a price war is to engage in the battle and emphasize the unique features,benefits,and value your company offers its customers.

Accepted Answer

A) True 
 B)False

Question 18

Pandecker,Inc.,estimates the variable costs of producing one unit to be $11.26.The company plans to produce 26,500 units.The fixed costs the company expects to incur are $82,770.What is Pandecker's break-even selling price?

Accepted Answer

A)  $14.38
B)  $35.17
C)  $11.26
D)  $3.12

Question 19

Explain the difference between absorption costing and variable (or direct)costing.Which one is more useful when establishing prices? Why?

Accepted Answer

Full absorption costing is the tradition...

Question 20

Which of the following is/are true regarding cost-plus pricing?

Accepted Answer

A)  It encourages the manufacturer to operate efficiently.
B)  It fails to consider competitors' prices appropriately.
C)  It fails to guarantee the manufacturer a desired profit margin.
D)  Only A and C

Exam 10: Pricing Strategies

How would Penny Matthews go about determining how to price the services her business plans to offer?

Correct AnswerverifiedThis case addresses the issue of establi...View AnswerShow Answer

Which of the following statements about price is true?

Correct AnswerverifiedShow Answer

An MP3 player is sold at a price close to the break even point,but the accessories for the product are priced at a premium,offer impressive contribution margins.This is an example of:

Correct AnswerverifiedShow Answer

The manufacturer's suggested price takes into account the small firm's cost structure and its competitive situation.

Correct AnswerverifiedShow Answer

A common pricing mistake entrepreneurs make is lowering prices because they fail to recognize the:

Correct AnswerverifiedShow Answer

________ is the difference between the cost of a product or service and its selling price.

Correct AnswerverifiedShow Answer

Ultimately,the "right" price for a product or service depends on one factor:

Correct AnswerverifiedShow Answer

The best way to survive a price war is to engage in the battle and emphasize the unique features,benefits,and value your company offers its customers.

Correct AnswerverifiedShow Answer

Pandecker,Inc.,estimates the variable costs of producing one unit to be $11.26.The company plans to produce 26,500 units.The fixed costs the company expects to incur are $82,770.What is Pandecker's break-even selling price?

Correct AnswerverifiedShow Answer

The most common pricing mistake small business owners make is setting the price for the products and services they sell too high.

Correct AnswerverifiedShow Answer

If Miller desires a profit of $120,000,what price should she set?

Correct AnswerverifiedShow Answer

One of the requirements to be able to offer ________ is to make certain that the firms' cash position is ________.

Correct AnswerverifiedShow Answer

One key to setting prices properly is based on understanding a company's:

Correct AnswerverifiedShow Answer

Explain the difference between absorption costing and variable (or direct)costing.Which one is more useful when establishing prices? Why?

Correct AnswerverifiedFull absorption costing is the tradition...View AnswerShow Answer

The interchange fee is a bank charge that retailers pay whenever customers use a credit or a debit card to pay for a purchase.

Correct AnswerverifiedShow Answer

Without the advantage of a unique business image,a small business must match local competitors' prices or risk losing sales and customers.

Correct AnswerverifiedShow Answer

Small companies have three options for selling to customers on credit:

Correct AnswerverifiedShow Answer

Which of the following is/are true regarding cost-plus pricing?

Correct AnswerverifiedShow Answer

Which of the following is/are not true regarding pricing for service firms?

Correct AnswerverifiedShow Answer

One of the most important determinants of customers' response to a price is whether they perceive the price to be a fair exchange:

Correct AnswerverifiedShow Answer

Correct Answer
verified
This case addresses the issue of establi...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

One of the requirements to be able to offer is to make certain that the firms' cash position is .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Full absorption costing is the tradition...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified