Question 1
1. Craftarium, Inc. makes and sells beaded purses, jackets, slippers, and other fashion items. Which of the following is the BEST example of one of its fixed costs?
payment on leased delivery vehicles
purse handles
unbeaded jackets
packaging for kits
advertisements in fashion magazines
10 points
Question 2
1. Procter & Gamble dropped the price of Pringles Potato Chips in the Southeast due to price competition and consumer demand. As a result of the price reduction, Procter & Gamble increased unit sales and earnings by 10 percent due to:
price wars with other snack food makers
increases in both supply and demand
elasticity of demand
price demand determinants
market share fluctuations
10 points
Question 3
1. Furr Friends sells kits for making personalized grave markers for pets. The company sells each kit for $22. The average variable cost for each kit is $13, and the total annual fixed costs for plant operation are $78,300. What is the break-even point in units?
3,559
6,023
8,700
2,237
none of the other answers
10 points
Question 4
1. The pricing policy used by Middleton Industries, manufacturer of Renaissance charms for bracelets and necklaces, is to set prices so the its retail prices are as high as the market will tolerate. Additionally, Middleton strives to keep its costs at an industry low by using silver and gold overlays over charms made of cheap base metal. This is an example of a _____ policy
market share pricing
profit maximization
demand-oriented
sales maximization
status quo pricing
10 points
Question 5
1. As a short-term pricing objective, _____ can be effectively used on a temporary basis to sell off excessive inventory.
profit maximization
profit-oriented pricing
status quo pricing
sales maximization
market share pricing
10 points
Question 6
1. Richelieu Foods, Inc. decided to offer a much larger than customary profit margin to grocery wholesalers and retailers on its new line of organic pizzas. This pricing strategy is designed to do all of the following EXCEPT:
encourage retailers to advertise this high-margin item
give dealers an incentive to promote the new organic pizzas
develop wide and convenient distribution
maximize profit margin for the producer
encourage trial by consumers if the pizzas are priced low by retailers
10 points
Question 7
1. At Wal-Mart, Randi saw a bag of daffodil flower bulbs and a box of plant fertilizer. The items, which were sold together, retailed at $28.50, but were marked down to $19.99. The retailer sold one at the $28.50 price and five at the $19.99. The retailer’s revenue is:
$19. 99
$28.50
$99.95
$128.45
cannot be calculated with the information provided
10 points
Question 8
1. Franz Hall wants to open a business selling cotton candy from a mobile cart. He cannot decide whether to base his pricing objectives on market share, dollar sales, or unit sales. Regardless of which he chooses, his firm’s pricing objective can be categorized as:
status quo
profit oriented
need oriented
cost oriented
sales oriented
10 points
Question 9
1. The advertisements for Bernard Hinault brand bicycles claim that it is the most expensive bicycle in the world. This is an example of _____ pricing.
target return
prestige
market share
maintained markup
profit maximization
10 points
Question 10
1. Hal Macini owner of Evergreen Landscaping is more interested in earning customer goodwill than striving for maximum profit. He determines his prices by maintaining the company’s profitability at a level that gives him a good living but will never make him a rich man. Macini is basing his pricing policy on:
maintaining stable sales levels
earning satisfactory profits
creating retained earnings
creating the most sales possible
decreasing consumer demand
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