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--------------------------------------------------------------------------------------------------------------------------------------Use this information for questions (1 thru 12) that refer to the "Salespeople" case.
Wilson Alvaro graduated with a marketing degree almost a year ago. Like many of his friends, he took a job in sales and really enjoys it.
A description of Wilson's job and those of some of his friends are noted below.
Wilson Alvaroloves biking and has his dream job. He works for a wholesale company that sells mountain bikes for a manufacturer. He
works with a small group of people who call on the buying offices for two large retail chains, Wal-Mart and Toys R Us. The group
includes a finance person and a production person, and they all work together to meet the specific needs of these two big accounts; for
example, sometimes they recommend a model of bike that will be available from only that retailer's stores. However, Wilson's main job
focuses on building relationships and solving customer problems. Only occasionally is he expected to try to persuade the retailers to
buy more bikes.
Amy Bowdensells life insurance. She calls on new parents and persuades them to buy insurance products. It is difficult for a manager
to control Amy's work, but she has incentive to work hard because her job security and income depend on getting sales. She is a
confident self-starter, so she likes it that way.
Ben Petersonworks for a fashionable men's clothing store. He enjoys spending time with customers who come in, learning about their
fashion needs, and helping them pick clothes that really work for them. While the store manager can easily observe and direct Ben's
activities, the manager wants Ben to have the incentive to increase customer purchases and satisfaction.
Emily Wintershandles inside sales for a major industrial distributor. She deals with a regular set of established customers, most of
whom know what they want. Emily talks to them on the phone and answers questions about products, delivery time, and pricing. She
sometimes works with outside sales reps who visit customers and help introduce new products. Emily is the first person her customers
call when there's a problem with a purchase, so she spends a lot of time dealing with customer problems. As an inside salesperson,
Emily's work is easily supervised by a sales manager - and she has little influence on how much her customers buy.
Melissa Tranworks for a company that sells paper products (like napkins, paper towels, and paper plates) primarily through small
independent grocers. Most of the grocers are regular customers, but sometimes she makes cold calls to new grocery stores. Melissa's
job is to develop goodwill and try to increase sales. For example, she often sets up special promotional displays in stores. Her
compensation plan gives her income security, but she also can receive a bonus for sales growth in her territory.
Charlie Riggs is a telemarketer for an Internet service provider. He calls people on a list provided by his firm and tries to sign them up
for Internet service. Charlie relies heavily on a presentation he learned during his training. Charlie is very good at what he does and
loves that the more success he has the more he earns.
1. Which salesperson's main sales task is supporting?
A. Wilson Alvaro
B. Melissa Tran
C. Emily Winters
D. Ben Peterson
2. Which salesperson's primary task is order taking?
A. Emily Winters
B. Melissa Tran
C. Amy Bowden
D. Wilson Alvaro
E. Charlie Riggs
3. Which of the following is true about Melissa Tran's sales position?
A. Recruiting for this job would not require a job description.
B. It involves major account management.
C. The job would not require product training — only sales training.
D. It involves missionary sales.
E. None of the above.
4. Wilson Alvaro's sales position involves:
A. providing customer service.
B. team selling.
C. major account management.
D. all of the above.
E. none of the above
5. Which salesperson has a job where compensation is likely to be straight salary?
A. Ben Peterson
B. Amy Bowden
C. Melissa Tran
D. Emily Winters
E. Charlie Riggs
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--------------------------------------------------------------------------------------------------------------------------------------6. What type of compensation plan should Ben Peterson have?
A. straight salary
B. straight commission
C. a combination of salary and commission.
D. a salary that is paid only if a certain sales quota is achieved.
E. any of the above is equally appropriate for Ben's job.
7. Which salesperson probably does the most prospecting?
A. Amy Bowden
B. Wilson Alvaro
C. Melissa Tran
D. Charlie Riggs
8. What sales presentation approach does Charlie Riggs use?
A. missionary presentation.
B. prepared sales presentation.
C. consultative selling approach.
D. selling formula approach.
E. no sales presentation approach is used because he just calls people and says what he learned during training.
9. What type of sales presentation approach does Ben Peterson use?
A. Consultative selling approach.
B. Prepared sales presentation.
C. Missionary selling.
D. Selling formula approach.
E. Sales quota approach.
10. Which salesperson does the most customer service?
A. Charlie Riggs
B. Melissa Tran
C. Emily Winters
D. Ben Peterson
E. Amy Bowden
11. Which salesperson has a job that requires NO training in sales?
A. Charlie Riggs.
B. Melissa Tran.
C. Emily Winters.
D. Ben Peterson.
E. All of these jobs require some training in sales.
12. Melissa Tran's company wants to have enough salespeople to serve 1,000 accounts. An effective salesperson can call on each
account 12 times a year and should average about two hours per sales call. Each salesperson works 40 hours a week and takes off
two weeks for vacation each year. Salespeople spend half their time on travel and administration. How many salespeople does
Melissa's company need?
A. 6
B. 12
C. 24
D. 40
E. There is not enough information to determine the answer.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------13. Which sales presentation would be "best" for convenience (food) store clerks?
A. Selling formula approach
B. Prepared sales presentation
C. Target market presentation
D. Consultative selling approach
E. None of the above.
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--------------------------------------------------------------------------------------------------------------------------------------14. A customer service rep's job could include:
A. understanding a customer's complaints.
B. finding a remedy when something goes wrong with a firm's marketing mix after a purchase.
C. resolving a billing problem.
D. handling an exchange of a defective product.
E. all of the above.
15. Which of the following statements about prospecting is FALSE?
A. Prospecting focuses on identifying new customers.
B. A sales rep needs to set priorities for all prospects—both old and new.
C. A sales rep must qualify potential customers.
D. CRM systems help with the process of prospecting.
E. None of the above is false.
16. An established merchant wholesaler of business supplies would rely mainly on:
A. merchandisers.
B. order takers.
C. order getters.
D. supporting salespeople.
E. missionary salespeople.
17. The two basic decisions to be made in developing a compensation plan are the method of payment and
A. designation of the salesperson.
B. level of compensation.
C. number of years of service.
D. number of client commendations received.
E. career advancement.
18. According to the text, a salesperson may have choices about all of the following except
A. what target customers to aim at.
B. which particular products to emphasize.
C. which intermediaries to rely on or help.
D. what to manufacture.
E. how to adjust prices.
19. HP sells custom-made computer systems. Besides order getters, HP probably uses:
A. order takers.
B. missionary salespeople.
C. merchandisers.
D. manufacturers' agents.
E. technical specialists.
20. Missionary selling:
A. is another name for major accounts selling.
B. is the performance of personal selling activities for a nonprofit organization.
C. is the same as prospecting.
D. is often an entry position for higher level sales and marketing jobs.
E. is typically only used with a firm's largest or most important customers.
21. Producers who know something about their target customers' needs and attitudes often supply their relatively untrained salespeople
with a sales presentation in which (1) the salesperson does most of the talking at the beginning, (2) then brings the customer into the
discussion to clarify the customer's needs, and (3) tries to close the sale. They are using a:
A. consultative selling approach.
B. quota system.
C. prepared sales presentation.
D. selling formula approach.
E. target market presentation.
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--------------------------------------------------------------------------------------------------------------------------------------22. Carefully set territories
A. can reduce travel time but increase costs.
B. can reduce confusion about who has responsibility for a set of sales tasks.
C. always include at least one metropolitan area.
D. always reduce the cost of sales calls.
E. can increase travel time while reducing costs.
23. IBM's customers often need help installing its mini computer systems, so IBM should support the efforts of its order getters with:
A. sales promotion specialists.
B. selling aids.
C. missionary salespeople.
D. technical specialists.
E. order takers.
24. With the ___________ approach, the sales rep begins by making some general benefit statements to get the customer's attention
and interest.
A. Prepared sales
B. Fixed sales
C. Selling formula
D. Consultative selling
E. Differentiated value
25. Wilson Alvaro's sales position involves:
A. providing customer service.
B. team selling.
C. major account management.
D. all of the above.
E. none of the above
26. Retailers of expensive heterogeneous shopping products usually have a strong need for:
A. order takers.
B. technical specialists.
C. merchandisers.
D. order getters.
E. supporting salespeople.
27. Providing training in selling techniques help a salesperson in all of the following ways except
A. winning new customers by disparaging competitors.
B. listening carefully to identify a customer's real objections.
C. closing the sale.
D. working with customers in difficult customer service situations.
E. how to be more effective in cold calls on new prospects.
28. Order takers:
A. are not necessary if the firm has good order getters.
B. are the routine contact people in the sales force.
C. usually don't call on customers.
D. do not require any specialized training.
E. All of the above are correct.
29. The __________ involves developing a good understanding of the individual customer's needs before trying to close the sale.
A. Selling formula approach
B. Consultative selling approach
C. Prepared sales presentation
D. Fixed sales presentation
E. Differentiated value approach
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--------------------------------------------------------------------------------------------------------------------------------------30. Simon Juarez sells life insurance for a large New Mexico firm. He locates customers by selecting names out of a telephone
directory and calling to arrange an appointment. He begins each presentation by explaining the basic features and merits of his
product—eventually bringing the customer into the conversation to clarify the customer's insurance needs. Then he tells how his
insurance policy would satisfy the customer's needs and attempts to close the sale. Simon's sales presentation is based on the:
A. consultative selling approach.
B. selling formula approach.
C. canned presentation approach.
D. target market approach.
E. customer service approach.
31. __________ involves following all the leads in the target market to identify potential customers.
A. Sales presentation
B. Prospecting
C. Closing
D. Sales quota
E. Marketing
32. A prepared sales presentation:
A. is the best approach for most selling situations—since the company can control what the sales rep says.
B. usually involves many questions, to be sure each customer's needs are fully understood.
C. is common with high value items—to be sure the customer learns about all of the technical details.
D. is best when a lot of time is available for a sales presentation.
E. None of the above is true.
33. An order-taking sales rep would be MOST appropriate for a producer of:
A. cleaning materials for maintenance—calling on regular customers.
B. designer clothing—calling on possible new retailers.
C. laptop computers—selling to manufacturers who don't yet have any computers.
D. airplanes—calling on possible corporate jet customers.
E. a new brand of DVD system—calling on wholesalers.
34. Ali Mulhammed has been working for a producer of video games that sell through toy wholesalers to retailers. He knows all about
the games sold by his company and by competitors. He goes into his wholesalers' territories and tries to get local retailer customers
interested in the company's line—and even trains retailers to demonstrate the games. When a retailer is ready to buy, Ali turns the
business over to the wholesaler's sales rep. Ali is a:
A. member of the firm's major accounts sales force.
B. missionary salesperson.
C. technical specialist.
D. manufacturers' agent.
E. None of the above is correct.
35. The sales manager for a producer of consumer convenience products should recognize that the company may need:
A. order getters to sell its established line to regular wholesaler customers.
B. missionary salespeople to support its wholesalers.
C. order takers to open up new territories.
D. technical specialists to sell to purchasing agents.
E. All of the above.
36. Regarding sales force payment methods:
A. it is common to sacrifice some simplicity to gain more flexibility, incentive, or control.
B. combination plans offer some degree of security, incentive, and control.
C. straight commission offers the most incentive.
D. straight salary provides the most security and control.
E. All of the above are true.
37. Customer service reps:
A. are advocates for the customer.
B. solve problems after a purchase.
C. are advocates for the company.
D. promote the customer's next purchase.
E. all of the above.
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--------------------------------------------------------------------------------------------------------------------------------------38. San Oxana Insurance Company uses relatively untrained people to sell its life insurance. The sales reps learn prepared sales
presentations which help them describe the firm's policies to potential customers, discover each customer's specific needs, and then
lead them through some logical steps to a final close. They are using a:
A. selling formula approach.
B. customer service approach.
C. target market presentation.
D. consultative selling approach.
E. prepared sales presentation.
39. Regarding sales force compensation, the commission method is based on:
A. a percentage of dollar sales.
B. the number of new accounts.
C. customer satisfaction ratings.
D. customer service problems resolved.
E. any of the above.
40. A lawn care firm selling by phone to people listed in the telephone directory should use which of the following sales presentations?
A. consultative selling approach.
B. selling formula approach.
C. prepared sales presentation.
D. target market presentation.
E. None of the above.
41. The commission method of payment:
A. includes some salary and some commission.
B. offers the most security for the salesperson.
C. offers the most incentive for the salesperson.
D. is tied to results projected in the sales plan.
E. increases the amount of sales supervision needed.
42. A producer of business supplies is using manufacturers' agents to do:
A. merchandising.
B. order-getting.
C. order-taking.
D. technical advising.
E. supporting activities.
43. Customers for complicated installations and accessories usually expect a sales rep
A. to know all the technical details of the product.
B. to be able to discuss general business conditions with their top executives.
C. to know the details of the customer firm's particular applications of the product.
D. All of the above are likely to be expected.
E. None of the above is likely to be expected.
44. Tyler Young sells a diverse line of conveyor systems to small manufacturers. He has found that he is most successful when he uses
the sales call to help the customer solve some problem using one of his products. Tyler probably relies on
A. the missionary approach.
B. the prepared presentation approach.
C. the selling formula approach.
D. the consultative selling approach.
E. Any of the above is equally likely.
45. A producer wants to reduce sales force turnover AND obtain a more aggressive sales effort for its accessories. Which of the
following sales force payment methods should it use?
A. Straight salary
B. Selling formula plan
C. Combination plan
D. Straight commission
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--------------------------------------------------------------------------------------------------------------------------------------46. Which of the following descriptions of the three basic sales tasks is CORRECT?
A. ORDER-TAKING: various activities aimed at getting sales in the long run.
B. SUPPORTING: routine completion of sales made regularly to target customers.
C. ORDER-GETTING: seeking possible buyers with a well-organized sales presentation designed to sell a good, service, or idea.
D. All of the above are correct.
E. None of the above is correct.
47. The most popular sales force payment method is:
A. a combination plan.
B. the consultative selling method.
C. straight salary.
D. straight commission.
48. All of the following are true of job descriptions except
A. provides a basis for how salespeople should be paid.
B. lists routine prospecting and sales report writing tasks.
C. provides clear guidelines about what selling tasks the job involves.
D. lists general tasks to be performed but doesn't get too specific.
E. provides a basis for seeing how salespeople should be trained.
49. A professional salesperson:
A. is only expected to "get rid of the product."
B. has only one basic job—to communicate the company's story to customers.
C. may be given a title such as field manager or market specialist.
D. is expected to overcome the customer's objection—whatever it may be.
E. All of the above.
50. Dimitri Kojak works for a producer of industrial elevators. He knows all the technical details of the many different ways they are used
by business customers. He makes presentations to new prospects and eventually gets a share of their business. Dimitri is:
A. a member of the firm's major accounts sales force.
B. a missionary salesperson.
C. a technical specialist.
D. a producer's order getter.
E. a customer service rep.
51. The selling formula approach:
A. starts with a prepared presentation outline, discovers each customer's specific needs, and then leads the customer through some
logical steps to a final close.
B. uses the same sales presentation with every potential customer.
C. usually requires a more skilled salesperson than the consultative selling approach.
D. All of the above are true.
E. None of the above is true.
52. Jeffrey O'Donnell works for a producer of dairy products and knows all about these products. He is responsible for only two very
large chain customers. Other sales reps, like Jeffrey, call on other large chains for this producer. They regularly call on the central
offices of these big retail chains and encourage them to buy the company's full line. Jeffrey is:
A. a missionary salesperson.
B. a retail order taker.
C. a technical specialist.
D. a manufacturers' agent.
E. a member of his company's major accounts sales force.
53. When setting salespeople's compensation level,
A. a company should pay everyone at least the going market wage for order getters.
B. salespeople should be the highest-paid employees in the company.
C. order takers should be paid more than order getters.
D. the first step is to write job descriptions.
E. All of the above.
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--------------------------------------------------------------------------------------------------------------------------------------54. Customer service reps help:
A. customers buy.
B. the company win customers.
C. when a customer has technical questions that an order taker can't answer.
D. the company keep customers.
E. all of the above.
55. Which of the following statements about personal selling is FALSE?
A. Good salespeople present both the advantages and the disadvantages of their products.
B. Helping to buy is good selling.
C. Personal selling is often a company's smallest single operating expense.
D. A salesperson is often a representative of the whole company.
E. None of the above is false.
56. CeCe Springer works for a large cosmetics company. She calls on retailers to tell them about her firm's new products, to train the
retailers' salespeople, and to set up promotion displays. Her boss actually handles the order-related activities. CeCe is:
A. an order getter.
B. a manufacturers' agent.
C. a technical specialist.
D. an order taker.
E. a missionary sales rep.
57. A good marketing manager organizing a new sales force knows that:
A. new sales reps should start out on the major accounts sales force so they can learn the business from the bottom up.
B. the most profitable approach is to start with a small number of salespeople, and then quickly add more if they can't do the job.
C. it may be necessary to rely on team selling and have more than one rep call on a single customer if different skills are needed.
D. All of the above are true.
E. None of the above is true.
58. "Prospecting:"
A. involves following all the leads in the target market.
B. should require a sales rep to spend the same amount of time with each prospect.
C. refers to selection of the firm's target market.
D. should use a system for allocating time to potential customers based on their potential.
E. Both A and D.
59. Which of the following statements about customer service is true?
A. A customer service rep may have to deal with a customer problem that is due to a customer error, not just an error by the company.
B. Customer service is the service part of the benefit that a customer gets when purchasing a physical good.
C. Customer service costs are likely to decrease a firm's customer equity.
D. Customer service is more important for winning customers than for keeping customers.
E. From a firm's perspective, customer service is a necessary evil but isn't likely to cost the firm anything.
60. Kyra Hanover is an order getter for a modern wholesaler. Kyra is LEAST likely to be involved with:
A. repairing products returned to retailers by customers.
B. conducting demonstrations for retailers' salespeople and customers.
C. checking stock to determine what retailers should order.
D. helping to plan special promotions and advertising for retailers.
E. serving as a marketing advisor to her retailers.
61. Some sales reps try to get a prospect to do most of the talking at first—to help pinpoint the potential customer's needs. After the
sales rep feels that he understands the customer's needs, he begins to enter more into the discussion, helping the customer
understand his own needs, showing how his product satisfies the customer's needs, and then trying to close the sale. This type of sales
presentation uses the:
A. selling formula approach.
B. target market presentation.
C. consultative selling approach.
D. prepared sales presentation.
E. None of the above.
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--------------------------------------------------------------------------------------------------------------------------------------62. Which of the following statements is true?
A. Good salespeople are born with inherent selling traits and need little training.
B. All salespeople need training.
C. Selling skills are best learned with interactive Web training programs.
D. New salespeople should be immediately sent out on the road to get acquainted with the firm's best customers.
E. Training should include on-the-job observation, but classroom and Web-based learning is rarely needed.
63. Edward Seaton owns a firm that manufactures custom-made carpets. He has a regular sales force to call on smaller customers and
an elite force to call on larger accounts. The elite sales force is called:
A. customer service reps.
B. major accounts sales force.
C. technical specialists.
D. supporting salespeople.
E. missionary salespeople.
64. The _________ compensation plan increases the amount of sales supervision needed.
A. Straight salary
B. Commission pay
C. Bonus plan
D. Combination plan
E. Profit-sharing plan
65. A producer wants to increase the amount of time its sales reps spend on supporting activities. It also wishes to keep its sales reps
motivated and aggressive, and also provide some security. Which payment plan should the firm use?
A. Straight salary
B. Combination plan
C. Straight commission
66. A technical specialist:
A. often has a background in product applications rather than sales.
B. may call on the customer both before and after a purchase.
C. may work in conjunction with an order getter to persuade new clients.
D. All of the above are true.
E. None of the above is true.
67. Order taking involves:
A. establishing relationships with new customers and developing new business.
B. selling to new customers.
C. seeking possible buyers with a well-organized sales presentation designed to sell a good, service, or idea.
D. enhancing the relationship with the customer and getting sales in the long run.
E. routinely completing sales made regularly to target customers.
68. A salesperson may have to make choices about
A. which particular products in the whole line to push most aggressively.
B. what specific target customers to aim at.
C. how to adjust prices.
D. which intermediaries to rely on or help.
E. All of the above.
69. A large producer of snack foods feels that retailers do not promote its products aggressively enough—because they also sell
competitors' products. The producer should use some:
A. missionary sales reps.
B. more aggressive sales reps.
C. order takers.
D. order getters.
E. manufacturers' agents.
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--------------------------------------------------------------------------------------------------------------------------------------70. According to the text, to recruit, motivate, and keep good salespeople, a firm has to
A. provide encouragement by giving trophies and certificates.
B. give public recognition.
C. develop an effective compensation plan.
D. offer a promotion.
E. reinvent its marketing strategies.
71. A job description for a sales position
A. should be detailed enough that it lists the specific tasks to be performed.
B. should be in writing, but should be quite general so that it doesn't reduce the sales manager's flexibility in assigning jobs.
C. should look pretty much the same from one company to another.
D. is not very useful, since the job is always changing.
E. all of the above.
72. Regarding sales force compensation methods:
A. combination plans provide some security and some incentive.
B. straight commission avoids the need to consider a sales quota.
C. straight salary provides the most incentive.
D. sales quotas play no role in any of the methods.
E. All of the above.
73. The ____________ method of payment uses a percentage of dollar sales in calculating compensation.
A. Bonus
B. Commission
C. Straight salary
D. Combination
E. Employee discount
74. Missionary salespeople
A. work with customers to resolve problems that arise at the time of purchase.
B. work for producers calling on their intermediaries and their customers.
C. provide technical assistance to order-oriented salespeople.
D. work with customers to resolve problems that arise with a purchase, usually after the purchase has been made.
E. provide information about products, explain company policies, and even negotiate prices or diagnose technical problems.
75. These salespeople try to develop goodwill and stimulate demand, help intermediaries train their salespeople, and often take orders
for delivery by intermediaries.
A. Order takers
B. Customer service reps
C. Missionary salespeople
D. Technical specialists
E. Account representatives
76. Customer service reps
A. work with customers to resolve problems that arise at the time of purchase.
B. work for producers calling on their intermediaries and their customers.
C. provide technical assistance to order-oriented salespeople.
D. work with customers to resolve problems that arise with a purchase, usually after the purchase has been made.
E. are invaluable in working with business customers, but not final consumers.
77. Regarding personal selling, good sales managers know that:
A. many orders are lost simply because the salesperson didn't ask for the order.
B. salespeople should spend the same amount of time with each prospect.
C. the sales rep has very little influence on a prospect's response.
D. good salespeople are born—not taught.
E. All of the above.
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--------------------------------------------------------------------------------------------------------------------------------------78. A producer's order taker
A. usually has little opportunity to increase sales in a territory.
B. is expected to help customers when something goes wrong with the marketing mix.
C. doesn't have to make sales presentations or keep customers informed about new developments—order getters do these tasks.
D. All of the above are true.
E. None of the above is true.
79. Which of the following statements about a salesperson's role is TRUE?
A. The salesperson rarely serves as a link between the firm and its customers.
B. The salesperson represents the customer back inside the selling firm.
C. The salesperson also holds titles such as management specialist and chief engineer.
D. The salesperson only aims to sell the customer.
E. A salesperson is seldom responsible for negotiating prices or diagnosing technical problems.
80. A sales rep for installations probably should use a ______________ sales presentation.
A. consultative selling approach
B. target market
C. prepared
D. selling formula approach
E. any of the above
81. A breakdown in any element of the marketing mix can result in a requirement for
A. customer service.
B. additional sales promotion.
C. reimbursement.
D. replacing the salesperson.
E. technical specialists.
82. Betti Hallmark sells women's clothing and gets most of her business from regular customers who have bought from her before. Betti
never tries to sell anything before first trying to determine each customer's specific needs. Once she understands the customer's needs,
Betti helps the customer understand her own needs and then shows how some product will fill those needs. Betti's sales presentation
uses the:
A. "canned" approach.
B. target market presentation.
C. selling formula approach.
D. consultative selling approach.
E. None of the above.
83. ______________ would be LEAST LIKELY to use supporting salespeople.
A. Supermarkets
B. Producers of prescription drugs
C. Producers of business accessories
D. Producers of consumer staples
E. Merchant wholesalers of installations
84. Even though commissions are often based on a percentage of dollar sales, they can be based on _____________ instead.
A. number of new accounts.
B. customer satisfaction ratings.
C. customer service problems resolved in some time period.
D. all of the above.
E. none of the above.
85. Which of the following statements by a sales manager suggests a problem?
A. "Taking a successful sales rep out of a territory for sales training is like spending money to teach a fish to swim."
B. "I was a sales rep before becoming manager, so I don't need a job description to help me look for new salespeople."
C. "I select new salespeople all by myself, because I am the one responsible for the performance of the sales force."
D. Each of the above indicates a problem.
E. None of the above indicates a problem.
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--------------------------------------------------------------------------------------------------------------------------------------86. Order getters:
A. may make a sale by helping a customer solve a business problem.
B. are more likely to be used with homogeneous shopping products than heterogeneous shopping products.
C. are used in business markets but not in consumer markets.
D. generally rely on a routine "canned" sales presentation.
E. All of the above are true.
87. A customer service rep's main job is to:
A. take orders.
B. find a remedy when something goes wrong with a firm's marketing mix after a purchase.
C. get new orders.
D. set up retail displays for retail customers.
E. listen to customer complaints.
88. With the ___________ approach, the customer and the salesperson work together to satisfy the customer's needs and solve the
problem.
A. Prepared sales
B. Fixed sales
C. Selling formula
D. Consultative selling
E. Differentiated value
89. Customer service reps:
A. are order getters who sell service products.
B. usually work with missionary salespeople.
C. resolve problems after a purchase has been made.
D. usually install technical products for customers.
E. hire professional services personnel.
90. The selling formula approach
A. makes some general benefit statements to get the customer's attention and interest.
B. starts with a prepared presentation outline approach and leads the customer through some logical steps to a final close.
C. involves developing a good understanding of the individual customer's needs before trying to close the sale.
D. uses a memorized presentation that is not adapted to each individual customer.
E. is a problem-solving approach in which the customer and salesperson work together to satisfy the customer's needs.
91. Order takers are concerned with:
A. establishing relationships with new customers and developing new business.
B. selling to regular customers, completing most sales transactions, and maintaining relationships with their established customers.
C. seeking possible buyers with a well-organized sales presentation designed to sell a good, service, or idea.
D. selling unsought and heterogeneous shopping products.
E. working with customers to resolve problems that arise with a purchase, usually after the purchase has been made.
92. At least ________ percent of the total U.S. labor force do sales work.
A. 20
B. 10
C. 30
D. 50
E. 40
93. Which of the following statements about salesperson compensation is FALSE?
A. Commissions reduce the need for working capital.
B. Incentives must be carefully aligned with the firm's objectives.
C. Compensation plans should be clear.
D. Sales managers must plan, implement, and control.
E. None of the above is false.
12
--------------------------------------------------------------------------------------------------------------------------------------16 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 16 CH
--------------------------------------------------------------------------------------------------------------------------------------94. With the ___________ approach, the salesperson assumes that a customer faced with a particular stimulus will say yes to his
request for an order.
A. Selling formula
B. Consultative selling
C. Prepared sales
D. Fixed sales
E. Differentiated value
95. A salesperson for cold remedy products visits pharmacists during the cold season and encourages them to use a special end-ofaisle display for his firm's cough syrup and then helps set up the display. The salesperson is a(n)____________.
A. Customer service representative
B. Order taker
C. Technical specialist
D. Missionary salesperson
E. Order getter
96. Order getters
A. are concerned with establishing relationships with new customers and developing new business.
B. sell to the regular or established customers, complete most sales transactions, and maintain relationships with their customers.
C. usually handle all adjustments or complaints.
D. routinely complete sales made regularly to target customers.
E. are usually responsible for answering any final questions and completing the sale.
13
--------------------------------------------------------------------------------------------------------------------------------------16 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 16 CH
---------------------------------------------------------------------------------------------------------------------------------------
16chprvw17edso Key
1. (p. 401-402) B
2. (p. 400) A
3. (p. 402) D
4. (p. 403-405) D
5. (p. 413) D
6. (p. 413) C
7. (p. 415) D
8. (p. 417-418) B
9. (p. 417-418) A
10. (p. 403-404) C
11. (p. 411) E
12. (p. 407) C
13. (p. 417) B
14. (p. 404) E
15. (p. 415-416) E
16. (p. 401) B
17. (p. 413) B
18. (p. 399) D
19. (p. 402) E
20. (p. 402) D
21. (p. 418) D
22. (p. 407) B
23. (p. 402) D
24. (p. 417) D
25. (p. 403-405) D
26. (p. 400) D
27. (p. 412) A
28. (p. 400) B
29. (p. 417) B
1
--------------------------------------------------------------------------------------------------------------------------------------16 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 16 CH
--------------------------------------------------------------------------------------------------------------------------------------30. (p. 418) B
31. (p. 415) B
32. (p. 417) E
33. (p. 400) A
34. (p. 402) B
35. (p. 402) B
36. (p. 413-414) E
37. (p. 402-404) E
38. (p. 418) A
39. (p. 413) E
40. (p. 417) C
41. (p. 413) C
42. (p. 400) B
43. (p. 400) D
44. (p. 417) D
45. (p. 413) C
46. (p. 399) C
47. (p. 413) A
48. (p. 411) D
49. (p. 398) C
50. (p. 400) D
51. (p. 418) A
52. (p. 406) E
53. (p. 411) D
54. (p. 403) D
55. (p. 397-398) C
56. (p. 402) E
57. (p. 405) C
58. (p. 415-416) E
59. (p. 404) A
60. (p. 400) A
2
--------------------------------------------------------------------------------------------------------------------------------------16 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 16 CH
--------------------------------------------------------------------------------------------------------------------------------------61. (p. 417) C
62. (p. 411-412) B
63. (p. 406) B
64. (p. 413) A
65. (p. 413) B
66. (p. 402) D
67. (p. 400) E
68. (p. 399) E
69. (p. 402) A
70. (p. 412) C
71. (p. 411) A
72. (p. 413) A
73. (p. 413) B
74. (p. 402) B
75. (p. 402) C
76. (p. 402) D
77. (p. 401) A
78. (p. 400) B
79. (p. 398) B
80. (p. 417) A
81. (p. 404) A
82. (p. 417) D
83. (p. 401) A
84. (p. 413) D
85. (p. 411) D
86. (p. 400) A
87. (p. 404) B
88. (p. 417) D
89. (p. 402) C
90. (p. 418) B
91. (p. 400) B
3
--------------------------------------------------------------------------------------------------------------------------------------16 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 16 CH
--------------------------------------------------------------------------------------------------------------------------------------92. (p. 397) B
93. (p. 413-414) E
94. (p. 417) C
95. (p. 402) D
96. (p. 399) A
4
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--------------------------------------------------------------------------------------------------------------------------------------Use this information for questions (1 thru 15) that refer to the Pricing 1 case. (WPI) case.
As a project for her marketing class, Emily Washington is researching how five local businesses price their products. The following are
brief sketches of what she has learned about each company.
At Bella Computers, Emily has discovered that the company earned a 6 percent return on investment this year and wants to increase it
to 9 percent next year. To its retailer customers, Bella Computers gives cash discount terms of 2/10, net 30. It also gives retailers a 3%
reduction 0n the invoice amount due to advertise Bella products locally. Bella gives retailers' salespeople 2% of the sale price for each
Bella Computer they sell.
At Ross Pharmaceuticals, she learned that the company has invested heavily in developing a new product that recently received a
patent. Because cash is tight, the company wants to achieve a rapid return on its investment. The new patented product is badly
needed in the market, so a very inelastic demand curve is expected.
Digital Imaging makes photographic prints for wedding photographers. It is very concerned about competitor reactions to its pricing, so
it has selected prices that will not draw the attention of the competition and not start a price war. Digital Imaging offers customers an 8%
discount if their purchases exceed $20,000 a year.
Jack's One Hour Cleaners recently opened for business. The company invested a lot of money in new equipment, and feels that it has
to quickly get "at least 10% market share to stay in the game." This need obviously influences the company's pricing decisions. Jack's
also plans to offer customers 20% discounts on any order over $20.
National Printing Equipment (NPE) produces equipment that helps to print newspapers and magazines. The company sells directly to
printers and through wholesalers. Its salespeople negotiate prices with individual customers and often have to match competitors'
prices. NPE has a new product, the Gutenberg NP201, with some competitive advantages now, but competitors are expected to follow
quickly with similar products. The new product is being introduced into a market with elastic demand. In regard to freight charges for its
equipment, NPE's invoice reads, "Seller pays the cost of loading equipment onto a common carrier. At the point of loading, title to such
products passes to the buyer, who assumes responsibility for damage in transit, except as covered by the transportation agency."
1. National Printing Equipment ships its products:
A. based on freight-absorption pricing.
B. using uniform delivered pricing.
C. F.O.B. shipping point.
D. F.O.B. buyer's factory.
E. at no cost to the customer.
2. Bella Computers' pricing objective is best described as:
A. target return.
B. status quo oriented.
C. profit oriented
D. sales oriented
E. none of the above
3. Ross Pharmaceuticals' pricing objective is:
A. sales oriented.
B. profit maximization.
C. status-quo oriented.
D. to meet competition.
E. none of the above.
4. What is Digital Imaging's pricing objective?
A. status-quo oriented
B. sales oriented
C. profit oriented
D. target return
E. none of the above
5. What is Jack's One Hour Cleaners' pricing objective?
A. profit oriented
B. target return
C. sales oriented
D. status-quo oriented
E. none of the above
1
--------------------------------------------------------------------------------------------------------------------------------------17 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 17 CH
--------------------------------------------------------------------------------------------------------------------------------------6. Which company uses administered prices?
A. Bella Computers
B. Ross Pharmaceuticals
C. Digital Imaging
D. Jack's One Hour Cleaners
E. All of the companies use adminstered prices
7. National Printing Equipment has:
A. been violating the Sherman Act
B. been violating the Robinson Patman Act
C. a status-quo pricing objective
D. a skimming price policy
E. a flexible pricing policy
8. Which pricing policy would be recommended for Ross Pharmaceuticals' new product?
A. meeting competition pricing
B. penetration pricing
C. introductory pricing
D. skimming pricing
E. below-the-market pricing
9. National Printing Equipment's new Gutenberg NP201 should probably use:
A. price fixing.
B. skimming pricing.
C. introductory pricing.
D. penetration pricing.
E. seasonal discounts.
10. Which business offers a CUMULATIVE quantity discount?
A. Digital Imaging
B. Jack's One Hour Cleaners
C. National Printing Equipment
D. Ross Pharmaceuticals
E. Bella Computers
11. Which business offers a NONCUMULATIVE quantity discount?
A. Jack's One Hour Cleaners
B. Digital Imaging
C. National Printing Equipment
D. Ross Pharmaceuticals
E. Bella Computers
12. If one of Bella Computers' retail customers did not pay the invoice for 30 days, the customer would - in effect - be borrowing at what
annual interest rate?
A. 9 percent
B. 18 percent
C. 27 percent
D. 36 percent
E. 72 percent
13. The marketing manager at NPE says that the firm offers trade (functional) discounts. Why would it offer these?
A. to encourage customers to buy older models.
B. to cover the cost of work its wholesalers are expected to do.
C. to encourage quantity purchases by customers.
D. to avoid price competition.
E. to encourage customers to pay their bills quickly.
2
--------------------------------------------------------------------------------------------------------------------------------------17 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 17 CH
--------------------------------------------------------------------------------------------------------------------------------------14. The 3% price reduction Bella Computers gives its retailers is an example of:
A. push money.
B. value pricing.
C. an advertising allowance.
D. everyday low pricing.
E. a cash discount.
15. The 2% Bella Computers gives to retailers' salespeople is an example of:
A. value pricing.
B. push money.
C. everyday low pricing.
D. an advertising allowance.
E. value pricing.
16. A firm would likely pursue penetration pricing when
A. it expects zero competition.
B. economies of scale are nonexistent.
C. the elite market is substantial.
D. the whole demand curve is fairly elastic.
E. supply is limited.
17. Seeking a profit maximization pricing objective:
A. will help a firm to earn "all the traffic will bear."
B. requires some knowledge of the firm's demand curve to be implemented effectively.
C. with no competitors and an inelastic demand curve is likely to lead to "high" prices in the short run.
D. may lead to a low penetration price.
E. All of the above are true.
18. Jackson Motors, Inc. normally sells its electric motors to all buyers for $100. However, a competitor offered to sell similar motors to
one of Jackson Motors' biggest customers for only $80 and Jackson Motors offered that customer—but not its other customers—a $80
selling price. According to the Robinson-Patman Act:
A. Jackson Motors has not violated the law—it is just meeting competition.
B. Jackson Motors is breaking the law—unless it offers to sell motors to all of its customers for $80.
C. Jackson Motors cannot lower its $100 selling price.
D. Jackson Motors cannot use the "meeting competition in good faith" defense unless it beats its competitor's $80 selling price.
E. Jackson Motors AND its competitor are both guilty of price fixing.
19. Which of the following observations is true?
A. Market share objectives and straight sales growth objectives have similar limitations.
B. A larger market share, gained at whatever price, leads to sustainable competitive advantage.
C. Market share objectives are not popular among modern managers.
D. Sales growth essentially means bigger profits.
E. A sales-oriented objective does not refer to profit.
20. Cash discount terms of 2/10, net 30 on an invoice would—in effect— amount to borrowing at an annual interest rate of about
________ percent if the buyer did not pay the invoice for 30 days.
A. 10
B. 30
C. 18
D. 12
E. 36
21. Regarding pricing objectives, a good marketing manager knows that:
A. sales-oriented objectives usually lead to high profits.
B. target return objectives usually lead to a large profit.
C. status quo pricing objectives can be part of an extremely aggressive marketing strategy.
D. profit maximization objectives don't always lead to high prices.
E. Both C and D.
3
--------------------------------------------------------------------------------------------------------------------------------------17 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 17 CH
--------------------------------------------------------------------------------------------------------------------------------------22. Most firms operate in monopolistic competition, where products and whole marketing mixes are not exactly the same. This implies
that
A. there are pricing options.
B. value pricing has no advantage.
C. it's foolish to offer products above the market price.
D. there are no price choices in most markets.
E. it is better to be a price follower.
23. KeyLine, Inc., engages primarily in the manufacture of touch-sensitive LCD monitors. The company prices its products so that it
earns a 20 percent return on investment. Which pricing objective is the company following?
A. Meet competition
B. Unit sales growth
C. Non price competition
D. Target return
E. Share of market
24. Pricing objectives should be explicitly stated because:
A. they have a direct effect on pricing policies as well as price setting methods.
B. they are signals given to competing firms.
C. they form the basis of shareholder expectations about a firm's prospects.
D. it is required by law.
E. they are signals given to consumers.
25. A profit maximization pricing objective
A. is a sales-oriented pricing objective.
B. does not always lead to high prices.
C. can never be socially responsible.
D. is often stated as percentage of market share.
E. is a status quo oriented pricing objective.
26. Some critics charge that firms in oligopoly situations practice conscious parallel action. These critics apparently think the firms:
A. seek too high a target return objective.
B. give quantity discounts which are "too large."
C. raise prices to match increases in other industries.
D. are "conspiring" to set prices.
E. administer prices.
27. Careful handling of "trade-ins"—to avoid reducing the list price—is especially important for sellers of:
A. expense items.
B. raw materials.
C. emergency products.
D. component materials.
E. none of the above.
28. Caught between the threat of antitrust action, stockholder demands, and public interest groups, some large corporations set a(an)
______________ pricing objective.
A. increasing target return
B. "aggressive" competition
C. profit maximization
D. increasing market share
E. satisfactory long-run target return
29. Which of the following observations concerning F.O.B. pricing is not true?
A. Typically, it names the place.
B. F.O.B. shipping point pricing may narrow the market.
C. F.O.B. shipping point pricing complicates the seller's pricing.
D. If a firm wants to pay the freight for the convenience of customers, it can use F.O.B. delivered.
E. A firm can use F.O.B. buyer's factory if it wants to pay the freight.
4
--------------------------------------------------------------------------------------------------------------------------------------17 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 17 CH
--------------------------------------------------------------------------------------------------------------------------------------30. Some top managers seek only enough profits to convince stockholders that they are "doing a good job." The pricing objective of
such managers is:
A. satisfactory profits.
B. status quo.
C. nonprice competition.
D. profit maximization.
E. meeting competition.
31. Cherokee Cable Corporation, sells heavy wire cable to large construction companies around the country. Customers pay shipping
from a central warehouse in Dallas. Recently, a new competitor in Atlanta has been taking away some of Cherokee Cable's Southern
customers. If Cherokee Cable wants to compete in those distant markets, but not increase the cost of its product to other customers, it
would probably switch to
A. zone pricing.
B. specifying "F.O.B. Dallas" in its contracts.
C. uniform delivered pricing.
D. freight absorption pricing.
E. None of the above would help Cherokee Cable Corporation with its problem.
32. Cash discount terms of 2/10, net 60 on an invoice would—in effect— amount to borrowing at an annual interest rate of about
________ percent if the buyer did not pay the invoice for 60 days.
A. 22
B. 72
C. 14
D. 18
E. 36
33. Over time, a skimming policy usually involves
A. price movement up the demand curve.
B. price movement down the demand curve.
C. profit minimization in the market introduction stage.
D. efforts to target the top portion of the demand curve.
E. declining sales and profits.
34. Which of the following observations is true of a mature market?
A. There is downward pressure on prices.
B. Profit margins are never under threat.
C. Differentiating the value a firm offers is easy.
D. Pricing choices are abundant.
E. Price moves up the demand curve over time.
35. Regarding price-level policies:
A. meeting competition is the only sensible policy in monopolistic competition.
B. in an oligopoly situation, pricing "above the market" usually leads to an increase in profit.
C. a firm in pure competition may increase profit by pricing "below the market."
D. charging a lower price than seeming competitors may not mean that a firm is selling "below the market."
E. All of the above.
36. According to the text,
A. price has only a single dimension.
B. managers rarely have a choice in pricing.
C. managers should administer their prices.
D. managers should simply mark up their costs to determine pricing.
E. managers should follow a price leader's strategy.
37. A target return figure of zero implies:
A. setting negligible sales targets.
B. setting a price level that will just recover costs.
C. setting a price that helps attain previous year's high profitability.
D. setting a price that would match the industry standard profit margin.
E. setting a price at which competition will be zero.
5
--------------------------------------------------------------------------------------------------------------------------------------17 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 17 CH
--------------------------------------------------------------------------------------------------------------------------------------38. The court decisions in the Borden case clearly show that:
A. products of "like grade and quality" must be offered to all buyers at the same price—even if sold under different labels.
B. manufacturers who supply retailers with dealer brands cannot force the retailer to charge consumers the manufacturer's suggested
list price.
C. price fixing is always illegal.
D. a manufacturer can charge different prices for different brands of physically identical products as long as the price differentials do not
exceed the recognized consumer appeal of the higher-priced brands.
E. manufacturers cannot charge different prices for dealer brands and manufacturer brands.
39. Some marketing managers have set up relationships with Internet companies whose ads invite customers to "set your own price."
Such marketing managers
A. have given up on administering prices.
B. are carefully administering a flexible price.
C. are following a one-price policy.
D. make it easier for competition to undercut them.
E. are following a penetration pricing policy.
40. Managers justify status quo objectives as an attempt to do all of the following except
A. stabilize prices.
B. meet competition
C. maximize profits.
D. avoid competition.
E. stabilize market situation.
41. Skimming may maximize profits in the market introduction stage for an innovation, especially if
A. there are few substitutes.
B. all customers are price sensitive.
C. competition is intense.
D. a price reduction will reduce goodwill.
E. demand is perfectly elastic.
42. A pricing objective that seeks a specific level of profit is a:
A. profit maximization objective.
B. value objective.
C. sales-oriented objective.
D. target return objective.
E. status-quo objective.
43. Which pricing policy is probably "best" for a profit-oriented, low-cost producer who is introducing a new product into a market with
elastic demand and is expecting strong competition very soon after product introduction?
A. Skimming pricing
B. Introductory price dealing
C. Meeting competition pricing
D. Penetration pricing
E. Status-quo pricing
44. Arroyo Leather Furniture gives its wholesalers discounts of 30 percent and 10 percent—expecting the wholesalers to pass the 30
percent discount on to their retail customers. These discounts off the manufacturer's suggested retail prices—to cover the costs of the
jobs the intermediaries will do—are ______________ discounts.
A. seasonal
B. illegal
C. cash
D. trade (functional)
E. quantity
45. Which of the following is a status quo oriented pricing objective?
A. Target return
B. Unit sales growth
C. Profit maximization
D. Growth in market share
E. Non price competition
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--------------------------------------------------------------------------------------------------------------------------------------17 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 17 CH
--------------------------------------------------------------------------------------------------------------------------------------46. Which of the following observations concerning introductory price dealing is true?
A. Established competitors usually choose to meet introductory price dealing.
B. They are temporary price cuts to speed new products into a market.
C. They have the same effect as price skimming.
D. They are the same as low penetration prices.
E. The plan is to sustain the price cut for an extended period of time.
47. The cash discount terms for a purchase worth $1,000 made on August 1 are 3/10, net 30. How much will the buyer have to pay if he
makes the payment on August 7?
A. $930
B. $30
C. $1,030
D. $1,000
E. $970
48. Which of the following statements would be most likely to be made by a manager with a status-quo pricing objective?
A. "A price of $10.00 will penetrate the market."
B. "A price of $10.00 will not start a price war with our competitors."
C. "A price of $10.00 should maximize profits."
D. "A price of $10.00 will provide a 30% return on investment."
E. "A price of $10.00 should result in a 9% increase in sales."
49. If a producer's marketing manager doesn't know the shape of the demand curve for a new product, the initial price level policy
should probably be a ______________ policy.
A. flexible-pricing
B. target-return pricing
C. introductory pricing
D. penetration price
E. skimming price
50. The problem with sales-oriented pricing objectives is that:
A. many managers are evaluated by their level of sales.
B. larger sales don't necessarily lead to higher profits.
C. the number of units sold does not consider possible growth in the market.
D. sales growth usually leads to declining profits.
E. All of the above.
51. "Don't-rock-the-boat" thinking is most common when
A. a product is in the introduction stage.
B. the total market is not growing.
C. there is threat of intense competition.
D. a firm moves into international markets for the first time.
E. a product is in the growth stage.
52. Ceramics Distributing Co. wants to keep its inventory low. Which of the following would be MOST likely to encourage customers to
take over more responsibility for the storage function?
A. setting a skimming price
B. specifying invoice terms of 2/10, net 30
C. offering a noncumulative quantity discount
D. using zone pricing
E. using F.O.B. shipping point pricing
53. The Robinson-Patman Act does permit some price differences—but they must be based on
A. cost differences.
B. the need to make profits.
C. accounting practices.
D. cartel requirements.
E. conscious parallel action.
7
--------------------------------------------------------------------------------------------------------------------------------------17 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 17 CH
--------------------------------------------------------------------------------------------------------------------------------------54. Which of the following may be the only sensible pricing policy in oligopoly situations?
A. Maximizing profits
B. Pricing way below market
C. Meeting competition
D. Pricing way above market
E. Price leadership
55. Noncumulative quantity discounts
A. apply only to individual orders.
B. are designed to primarily encourage repeat buying.
C. reduce the customer's cost for additional purchases.
D. tie a buyer to the seller after a single purchase.
E. are never attractive to buyers.
56. A seller's invoice reads: "Seller pays the cost of loading said merchandise onto a common carrier. At the point of loading, title to
such products passes to the buyer, who assumes responsibility for damage in transit, except as covered by the transportation agency."
This shipment has been shipped:
A. F.O.B. delivered.
B. F.O.B. shipping point.
C. F.O.B. mill, freight absorbed.
D. F.O.B. buyer's factory.
E. F.O.B. seller's factory—freight prepaid.
57. Freight absorption pricing:
A. amounts to cutting list price to appeal to new geographic markets.
B. forces all buyers to pay higher shipping costs.
C. tends to restrict firms from competing in distant markets.
D. tends to decrease competition.
E. Both B and C.
58. Ceramics Distributing Co. wants to keep its inventory low. Which of the following would be LEAST likely to encourage customers to
take over more responsibility for the storage function?
A. offering a cumulative quantity discount
B. offering a stocking allowance
C. offering a noncumulative quantity discount
D. offering a seasonal discount
59. Prices are "administered" when:
A. they fall below "suggested list price."
B. prices can change every time a customer asks for a price.
C. government regulators set prices.
D. firms consciously set their own prices.
E. they are set by bargaining between buyers and sellers.
60. Antidumping laws:
A. protect consumers from the high prices charged by monopolistic foreign producers.
B. set the maximum price a foreign producer can charge.
C. are used in an effort to control the minimum price of imported products.
D. make it illegal for a foreign producer to sell a product at a price level lower than domestic producers.
E. force foreign producers to sell below cost if they want to compete with a nation's domestic producers.
61. Which of the following is LEAST LIKELY to be in the "Something of Value" part of the "price equation" for CHANNEL MEMBERS?
A. Repair facilities
B. Rebates
C. Price-level guarantees
D. Promotion aimed at customers
E. Convenient packaging for handling
8
--------------------------------------------------------------------------------------------------------------------------------------17 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 17 CH
--------------------------------------------------------------------------------------------------------------------------------------62. Everyday low pricing of consumer convenience products:
A. tends to reduce fluctuations in prices customers actually pay.
B. has been used by many retailers even though no producers have adopted this approach.
C. makes it easy to quickly compete on price—without changing the basic strategy—when a competitor offers a particularly large
discount for a short period of time.
D. relies on frequent discounts and allowances from the producer.
E. confuses customers and increases selling costs.
63. Regarding geographic pricing policies:
A. uniform delivered pricing tends to decrease the size of a firm's market.
B. F.O.B. pricing tends to increase the size of a firm's market.
C. freight absorption pricing tends to increase the size of a firm's market.
D. zone pricing encourages large orders.
E. All of the above.
64. A British firm selling in the U.S. prices its product at $100. The initial exchange rate is 0.80 pounds per dollar. If the new exchange
rate is 0.75 pounds per dollar, the revenue for the British firm from a single sale would drop by
A. 80 pounds.
B. 5 pounds.
C. 75 pounds.
D. 10 pounds.
E. 8 pounds.
65. Sales-oriented pricing objectives:
A. may include market share targets as well as dollar or unit sales targets.
B. might be achieved and still result in losses.
C. are especially risky during times when a firm's costs are rising rapidly.
D. All of the above are true.
E. None of the above is true.
66. A producer in Philadelphia uses "zone pricing." It's selling widgets for $150/ton in the Eastern Zone—which includes Richmond and
Baltimore. The actual freight cost from its plant to Baltimore is $70/ton and from its plant to Richmond is $80/ton. In this situation:
A. one ton of widgets costs a Baltimore buyer the same as an Richmond buyer.
B. both buyers would pay $225 for one ton of widgets.
C. one ton of widgets delivered to Richmond would cost the buyer $230.
D. one ton of widgets delivered to Baltimore would cost the buyer $220.
E. Both C and D.
67. When setting a price level policy, a good marketing manager knows that:
A. introductory price dealing usually does not increase sales.
B. a penetration price makes the most sense when there is a large "elite" market.
C. a "skimming" price may lead to low profits if demand is very elastic.
D. it's easy to raise prices if the initial price is too low.
E. none of the above is true.
68. To get the sale price, customers
A. buy when they have to buy.
B. buy when the seller wants to sell.
C. have to buy things that they never need.
D. have to give up all consumer surplus.
E. buy when they have a necessity.
69. Some nonprofit organizations set prices to increase market share because
A. it is a regulatory requirement.
B. they would never do any business otherwise.
C. they are trying improve their image.
D. they wish to monopolize the market.
E. they are not trying to earn a profit.
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--------------------------------------------------------------------------------------------------------------------------------------70. Price discrimination:
A. by firms selling to final consumers is illegal, but it is usually legal in selling to intermediaries.
B. is not covered by Federal laws, but in some states it is illegal.
C. is always illegal.
D. may be legal if the firm can prove that different prices were set based on different costs.
E. None of the above is true.
71. Advertising allowances offered by producers can be ILLEGAL unless they are made available:
A. for products of "like grade and quality."
B. to all customers on proportionately equal terms.
C. to all buyers in equal dollar amounts.
D. on all products sold by the producer.
E. within an FTC approved agreement.
72. Which of the following give a producer a way to be certain that final consumers actually get the price reduction?
A. Rebates
B. Push money allowances
C. Spiffs
D. Trade-in allowance
E. Noncumulative quantity discount
73. A producer of electrical parts in Kansas City wants to expand into the West Coast market—where price competition is tough. It
probably should use:
A. F.O.B. mill pricing.
B. uniform delivered pricing.
C. zone pricing.
D. freight absorption pricing.
E. either A or B.
74. Recently, some executives for highway construction companies agreed to stop competing with each other on price and to meet
every three months to decide their price for the next quarter. In this situation:
A. the Sherman Act has been violated.
B. the Robinson-Patman Act has been violated by price discrimination.
C. the executives are exercising their right to free trade.
D. the unfair trade practice acts have been violated.
E. as long as prices don't increase—the executives have done nothing wrong.
75. A sales-oriented objective may seek all of the following except
A. some level of unit sales.
B. some level of dollar sales.
C. target return profits.
D. share of the market.
E. percentage of the market.
76. A wholesaler has been offering his customers payment terms of 3/10, net 60. He wants to tighten his terms because interest rates
have gone up. He could change his terms to:
A. 3/10, net 90.
B. 3/20, net 60.
C. 4/10, net 60.
D. 3/10, net 30.
E. None of the above would be in the intended direction.
77. Target return pricing objectives:
A. usually are very high for firms facing heavy competition.
B. aren't used by industry leaders because they can maximize profits.
C. would never make sense for a nonprofit organization.
D. may simplify the management of large producers with many divisions or departments.
E. All of the above.
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--------------------------------------------------------------------------------------------------------------------------------------78. Unilever is introducing a new brand of car window cleaner in market maturity. To speed its entry into the market—without
encouraging price competition—Unilever should use:
A. a flexible-price policy.
B. a one-price policy.
C. a penetration pricing policy.
D. introductory price dealing.
E. a skimming pricing policy.
79. A one-price policy means:
A. offering the same price to all customers who purchase products under essentially the same conditions and in the same quantities.
B. never using temporary sales or rebates.
C. selling to different customers at different prices.
D. setting a price at the "right" level from the start and never changing it.
E. None of the above.
80. Fidelity Corp. earned a 6 percent return on investment last year and wants to increase it to 10 percent this year. Which of the
following pricing objectives is Fidelity seeking?
A. Target return
B. Growth in sales
C. Growth in market share
D. Maximize profits
E. Nonprice competition
81. If a producer wants to stabilize demand over time by encouraging repeat business, it should probably use
A. uniform delivered pricing.
B. phony list prices.
C. a seasonal discount.
D. a cash discount.
E. a cumulative quantity discount.
82. Genetech Corp. has invested heavily to develop a patented new product. Genetech wants to achieve a rapid return on its
investment. It probably should set a ______________ pricing objective.
A. profit maximization.
B. target return.
C. sales-oriented.
D. status-quo.
E. None of the above.
83. The majority of U.S. firms use a one-price policy
A. to broadcast a single price to competitors.
B. for administrative convenience.
C. to increase pricing flexibility.
D. to undercut competition.
E. to ward off competition from imports.
84. "Unfair trade practice acts":
A. prohibit very high markups at the retail level.
B. allow manufacturers to set retail prices for branded products.
C. prohibit price fixing among retailers.
D. allow intermediaries to sell below cost.
E. protect certain limited-line retailers from "ruinous" price competition.
85. Which of the following laws focuses specifically on price discrimination?
A. Robinson-Patman Act
B. Magnuson-Moss Act
C. Sherman Act
D. Wheeler-Lea Act
E. Federal Trade Commission Act
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--------------------------------------------------------------------------------------------------------------------------------------86. The following terms appeared on an invoice dated May 20 which was sent by a manufacturer to a retail store: 2/10, net 30. The
amount of the invoice was $2,000. Assuming the retailer paid the invoice on June 1 (10 days after the products were delivered), how
much should he have paid?
A. $1,900
B. $1,800
C. $2,000
D. $1,960
E. $2,040
87. Uniform delivered pricing:
A. usually results in higher delivered prices for everyone.
B. results in all buyers paying less than the actual transportation costs.
C. is most often used when transportation costs are relatively low.
D. is just an extension of F.O.B. pricing.
E. All of the above.
88. In oligopoly situations, each oligopolist may choose a status quo pricing objective and set its price at the competitive level. Some
critics call this pricing behavior
A. market share growth objective.
B. conscious parallel action.
C. dumping.
D. introductory price dealing.
E. predatory pricing.
89. A "penetration pricing policy":
A. is the same as a "meeting competition" price-level policy.
B. is wise when demand is fairly inelastic—offering an "elite" market.
C. involves temporary price cuts to speed new products into market.
D. involves a series of step-by-step price reductions along an inelastic demand curve.
E. may be wise if a firm expects strong competition very soon after its product introduction.
90. A firm has just received an invoice for $1,000 with the following terms: 3/10, net 30. In this case, the firm:
A. should not worry about earning the cash discount because the amount is small.
B. can take a 10 percent discount if it pays within 3 days, and otherwise the full amount is due in 30 days.
C. can take a 3 percent discount if it pays the invoice on the 30th day.
D. in effect, will be borrowing at an annual rate of 54 percent if it pays the invoice in 30 days.
E. should pay $900 if it pays within 10 days.
91. Which of the following laws specifically makes illegal any price discrimination which injures competition?
A. Magnuson-Moss Act
B. Robinson-Patman Act
C. Wheeler-Lea Act
D. FTC Act
E. Sherman Act
92. White Sands Heavy Equipment Co. produces industrial equipment that it sells through its national sales force. Its sales reps often
must negotiate with customers to match the low prices of foreign competitors. Apparently, the firm has
A. an "F.O.B.-Seller's Factory" price policy.
B. been violating the Robinson-Patman act.
C. a skimming price policy.
D. a status quo pricing objective.
E. a flexible-price policy.
93. "Push money" is most likely to be offered to:
A. cosmetics salespeople at a department store.
B. salesclerks at a grocery store.
C. component materials sales reps.
D. industrial supplies sales reps.
E. Each of the above is equally likely to receive "push money."
12
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--------------------------------------------------------------------------------------------------------------------------------------94. The marketing manager for Aerial Photography, Inc. says his sales reps have gotten in the habit of setting prices which do not
produce a profit. Aerial Photography apparently is using:
A. penetration pricing.
B. introductory price dealing.
C. administered pricing.
D. flexible pricing.
E. profit minimization pricing.
95. Which pricing policy would probably be best for a profit-oriented producer introducing a really new product with a very inelastic
demand curve?
A. Skimming pricing
B. Meeting competition pricing
C. Below-the-market pricing
D. Penetration pricing
E. Introductory price dealing
96. Which of the following geographic pricing policies would probably handicap a producer wanting to compete with other producers
who are closer to a potential buyer?
A. F.O.B. mill
B. F.O.B. delivered
C. Zone pricing
D. Freight absorption
E. All of the above.
97. A government agency charges motorists a toll for using a bridge. The toll is dropped when the cost of the bridge is paid. In other
words, the government's target return figure was
A. twenty percent.
B. one.
C. ten percent.
D. hundred percent.
E. zero.
98. Faced with many "me-too" competitors, Sonic Burgers, Inc. has set its price level to "meet competition"—while emphasizing
nonprice competition. Sonic Burgers' pricing objective seems to be a ______________ objective.
A. status quo
B. sales-oriented.
C. profit-oriented
D. satisfactory profits
E. maintaining market share
99. A producer's price level decision is made by the market in:
A. a monopoly.
B. pure competition.
C. monopolistic competition.
D. All of the above.
E. None of the above.
100. A large producer who offers no discounts and the same prices to all customers in the U.S.:
A. does not have pricing objectives.
B. ignores the benefits of administered pricing.
C. probably ignores nonprice competition too.
D. may be "playing it safe" because of concern about the Robinson-Patman Act.
E. is probably violating the antidumping laws.
101. Profit maximization pricing objectives:
A. almost always lead to high prices.
B. are generally not in the public interest.
C. seek to get as much profit as possible.
D. may be stated as a desire to achieve rapid sales growth.
E. All of the above.
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--------------------------------------------------------------------------------------------------------------------------------------102. In an oligopoly situation, a wise marketing manager will probably set the firm's price level:
A. at the competitive level.
B. on a negotiated basis—that is, customer by customer.
C. above competitors' prices.
D. at least 10 percent below the price leader's price.
E. below competitors' prices.
103. A leading hard-disk manufacturer introduces a new line of high-capacity disk drivers. After selling to elite customers at a high price
point, the company slowly reduces its prices over a period of time. The company is engaging in
A. single pricing.
B. introductory price dealing.
C. price skimming.
D. penetration pricing.
E. predatory pricing.
104. Which of the following observations concerning price fixing is true?
A. It is highly uncommon and relatively difficult to achieve.
B. It is permitted in the United States, under certain circumstances.
C. It is considered "conspiracy" under the Sherman Act.
D. In the U.S, individual managers are not held responsible for price fixing.
E. Price fixing laws across the globe are similar in nature.
105. When a buyer receives an invoice for $100 with terms of "2/15 net 30" he can expect to pay:
A. $100 if he pays anytime in the first 30 days.
B. less than $100 if he pays during the first 15 days.
C. $100 if he pays anytime during the first fifteen days.
D. more than $100 if he pays from day fifteen through day thirty.
E. the full $100 if he waits more than 30 days to pay.
106. Which of the following statements concerning "value pricing" is FALSE?
A. Value pricing tries to build customer loyalty.
B. Companies using value pricing guarantee what they offer.
C. Value pricing involves setting a fair price level for a marketing mix that meets customers' needs.
D. Value pricing means using "budget" or "cheap" prices.
E. The focus of value pricing is on the customer's requirements—and the whole strategy.
107. Pricing objectives should flow from, and fit in with,
A. shareholder expectations and market practices.
B. regulatory policies.
C. industry standards.
D. company-level and marketing objectives.
E. market price leader actions.
108. Cady ClayWorks offers its customers a 10 percent discount if they buy at least $200,000 worth of products during a year. The
products may be bought in one order—or spread out over several orders. Cady ClayWorks is offering a:
A. cumulative quantity discount.
B. brokerage allowance.
C. seasonal discount.
D. noncumulative quantity discount.
E. cash discount.
109. Offering a NONCUMULATIVE quantity discount seeks to:
A. reduce the seller's shipping costs.
B. encourage bigger orders.
C. discourage small orders.
D. shift some of the storing function to the buyer.
E. All of the above.
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--------------------------------------------------------------------------------------------------------------------------------------110. A marketing manager might offer a cash discount to channel members to:
A. increase sales during a slow period.
B. encourage buyers to pay their bills quickly.
C. reduce shipping or selling costs.
D. encourage them to buy in larger quantities.
E. All of the above.
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---------------------------------------------------------------------------------------------------------------------------------------
17CHprvw17edso Key
1. (p. 473) C
2. (p. 460-461) A
3. (p. 459-460) B
4. (p. 461-462) A
5. (p. 461-461) C
6. (p. 462) E
7. (p. 463) E
8. (p. 464-465) D
9. (p. 466) D
10. (p. 469) A
11. (p. 469) A
12. (p. 470) D
13. (p. 471) B
14. (p. 472) C
15. (p. 472) B
16. (p. 467) D
17. (p. 460) E
18. (p. 481) A
19. (p. 460-461) A
20. (p. 470) E
21. (p. 460-461) E
22. (p. 476) A
23. (p. 459) D
24. (p. 458) A
25. (p. 460) B
26. (p. 477-478) D
27. (p. 472) E
28. (p. 460) E
29. (p. 473) C
1
--------------------------------------------------------------------------------------------------------------------------------------17 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 17 CH
--------------------------------------------------------------------------------------------------------------------------------------30. (p. 460) A
31. (p. 474) D
32. (p. 470) C
33. (p. 464) B
34. (p. 476) A
35. (p. 476) D
36. (p. 461-462) C
37. (p. 460) B
38. (p. 480-481) D
39. (p. 463) B
40. (p. 461) C
41. (p. 464) A
42. (p. 459) D
43. (p. 465) D
44. (p. 471) D
45. (p. 461) E
46. (p. 467) B
47. (p. 470) E
48. (p. 461) B
49. (p. 464) E
50. (p. 461) B
51. (p. 461) B
52. (p. 469) C
53. (p. 480) A
54. (p. 477) C
55. (p. 469) A
56. (p. 473) B
57. (p. 474) A
58. (p. 469) A
59. (p. 461) D
60. (p. 478) C
2
--------------------------------------------------------------------------------------------------------------------------------------17 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 17 CH
--------------------------------------------------------------------------------------------------------------------------------------61. (p. 458) B
62. (p. 471) A
63. (p. 474) C
64. (p. 467-468) B
65. (p. 460) D
66. (p. 474) A
67. (p. 464-467) E
68. (p. 471) B
69. (p. 461) E
70. (p. 481) D
71. (p. 481) B
72. (p. 473) A
73. (p. 474) D
74. (p. 480) A
75. (p. 460) C
76. (p. 470) D
77. (p. 459) D
78. (p. 467) D
79. (p. 462) A
80. (p. 459) A
81. (p. 469) E
82. (p. 460) A
83. (p. 462) B
84. (p. 478) E
85. (p. 480) A
86. (p. 470) D
87. (p. 474) C
88. (p. 477) B
89. (p. 465) E
90. (p. 470) D
91. (p. 480) B
3
--------------------------------------------------------------------------------------------------------------------------------------17 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 17 CH
--------------------------------------------------------------------------------------------------------------------------------------92. (p. 463) E
93. (p. 472) A
94. (p. 463) D
95. (p. 464) A
96. (p. 473) A
97. (p. 460) E
98. (p. 461) A
99. (p. 476) B
100. (p. 481) D
101. (p. 460) C
102. (p. 477) A
103. (p. 464) C
104. (p. 480) C
105. (p. 470) B
106. (p. 474-475) D
107. (p. 458) D
108. (p. 469) A
109. (p. 469) E
110. (p. 470) B
4
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--------------------------------------------------------------------------------------------------------------------------------------Use this information for questions (1 thru 12) that refer to the Sporting Products, Inc. (SPI) case.
Randy Todd, marketing manager for Sporting Products, Inc. (SPI), is thinking about how changes taking place among retailers in his
channel might impact his strategy.
SPI sells the products its produces through wholesalers and retailers. For example, SPI sells basketballs to Wholesale Supply for
$8.00. Wholesale Supply uses a 20 percent markup and most of its "sport shop" retailer customers, like Robinson's Sporting Goods,
use a 33 percent markup to arrive at the price they charge final consumers. However, one fast growing retail chain, Sports Depot, only
uses a 20 percent markup for basketballs, even though it pays Wholesale Supply the same price as other retailers. Furthermore, Sports
Depot occasionally lowers the price of basketballs and sells them at cost—to draw customers into its stores and stimulate sales of its
pricey basketball shoes.
Sports Depot is also using other pricing approaches that are different from the sports shops that usually handle SPI products. For
example, Sports Depot prices all of its baseball gloves at $20, $40, or $60—with no prices in between. There are three big bins - one
for each price point.
Todd is also curious about how Sports Depot's new strategy to increase sales of tennis balls will work out. The basic idea is to sell
tennis balls in large quantities to nonprofit groups who resell the balls to raise money. For example, a service organization at a local
college bought 2,000 tennis balls printed with the college logo. Sports Depot charged $.50 each for the tennis balls-plus a $500 onetime charge for the stamp to print the logo. The service group plans to resell the tennis balls for $2.50 each and contribute the profits to
a shelter for the homeless.
Todd is not certain if Sports Depot ideas will affect SPI's plans. For example, SPI is considering adding tennis racquets to the lines it
produces. This would require a $500,000 addition to its factory as well as the purchase of new equipment that costs $1,000,000. The
variable cost to produce a tennis racquet would be $20, but Todd thinks that SPI could sell the racquet at a wholesale price of $40
each. That would allow most retailers to add their normal markup and make a profit. However, if Sports Depot sells the racquet at a
lower than normal price other retailers might decide to carry it.
1. What is the final selling price Robinson's Sporting Goods charges for a SPI basketball?
A. $10.00
B. $15.00
C. $15.75
D. $20.80
E. None of the above.
2. What is the final selling price Sports Depot charges for a SPI basketball?
A. $10.00
B. $12.00
C. $12.50
D. $15.00
E. $18.00
3. By pricing below other retailers, Sports Depot apparently:
A. hopes to achieve status quo pricing objectives.
B. wants to set prices based on "value in use."
C. relies on a high margin percent.
D. sees this as an oligopoly market.
E. expects a high stockturn rate.
4. SPI pays its salespeople a commission on each product they sell. The commission is:
A. part of the total cost — but not specifically a fixed or a variable cost.
B. part of the total fixed cost.
C. not included in figuring average cost.
D. a variable cost.
E. none of the above is true.
5. Which of the following would NOT be one of SPI's fixed costs in the production of basketballs?
A. rent on the building used to store inventory of balls.
B. rubber used to make the balls.
C. property taxes for the building used to make the balls.
D. depreciation on the equipment used to make the balls.
E. insurance on the building used to make the balls.
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--------------------------------------------------------------------------------------------------------------------------------------18 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 18 CH
--------------------------------------------------------------------------------------------------------------------------------------6. What is the service organization's average cost for the printed tennis balls it buys from Sports Depot?
A. $.50
B. $.75
C. $.95
D. $1.50
E. $2.00
7. How many of the printed tennis balls must the service organization sell to cover the $500 fixed printing charge?
A. 250
B. 400
C. 500
D. 1000
E. 2000
8. If SPI produces tennis racquets, how many racquets must it sell at $40 to break even?
A. 50,000
B. 60,000
C. 75,000
D. 100,000
E. none of the above answers is correct.
9. How could Randy Todd use break-even analysis with his tennis racquet decision?
A. To reveal the combination of quantity and price that gives the highest profit.
B. To set the most profitable price.
C. To estimate future sales.
D. To compare the breakeven quantity for different prices with the likely level of demand.
E. To determine Wholesale Supply's likely selling price.
10. If SPI uses average-cost pricing, a big problem will be:
A. it ignores the demand curve for its products.
B. fixed costs are too hard to estimate.
C. the effects of variable costs are ignored.
D. the desired profit cannot be included.
11. If Randy Todd wants to maximize profits for SPI's new tennis racquets, then he should set a price (and produce that related output)
where:
A. marginal revenue is zero.
B. price is as high as possible.
C. total revenue equals total cost.
D. marginal cost is at its minimum.
E. marginal cost is just less than or equal to marginal revenue.
12. Randy Todd wants to use marginal analysis to price the new tennis racquets, but doesn't know the exact shape of the firm's
demand curve. Under these circumstances marginal analysis:
A. is useless.
B. may be useful anyway because a profitable region usually surrounds the best price.
C. will suggest the same price as break-even analysis.
D. suggests that the only sensible approach is to follow the price leader.
E. none of the above is true.
13. When Sports Depot temporarily lowers the price of basketballs, it is using:
A. bait pricing.
B. leader pricing.
C. value-in-use pricing.
D. psychological pricing.
E. prestige pricing.
2
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--------------------------------------------------------------------------------------------------------------------------------------14. The pricing approach Sports Depot uses to price its baseball gloves is called:
A. odd-even pricing.
B. value-in-use pricing
C. prestige pricing.
D. bait pricing.
E. price lining.
15. A typical break-even analysis assumes that:
A. the marginal revenue from an additional unit sold is constant.
B. the fixed-cost contribution per unit decreases as units sold increases.
C. marginal cost from an additional unit sold is dropping.
D. All of the above.
E. None of the above.
16. The total fixed costs are $10,000, and the average variable cost per unit is $3. For a production volume of 10,000 units, the average
cost per unit is
A. $3.
B. $1.
C. $4.
D. $3.3.
E. $10
17. If a demand curve were elastic within a price range, then:
A. marginal revenue would be negative within this price range.
B. lowering the price within this range would increase total revenue.
C. the marginal revenue curve would be above the demand curve in this range.
D. in this range, raising price would increase total revenue.
E. All of the above.
18. Break-even analysis
A. can be adapted to evaluate the quantity that needs to be sold to earn a target profit—by adding the target profit to fixed costs.
B. may result in a "break-even" quantity that it would be impossible to sell at the assumed price.
C. focuses on the contribution of each unit sold to the reduction of fixed costs.
D. All of the above are true.
E. None of the above is true.
19. Given the following data, compute the BEP in DOLLARS:
Selling price = $2.00
Variable cost = $1.00
Fixed cost = $150,000
A. $300,000
B. $400,000
C. $100,000
D. $200,000
E. $50,000
20. Michael Soles—owner of Soles Shoe Store—recently discovered that shoe stores in his trading area have an average markup of 40
percent. Upon investigation, Michael found that his average markup is $15 on shoes that he sells for $45. This suggests that:
A. Michael has higher-than-average costs.
B. Michael is pricing his products higher than his competitors.
C. Michael is taking a smaller average markup than his competitors.
D. Michael has a relatively high stockturn rate.
E. Michael's markups in dollar amounts are about the same as his competitors.
21. A profit-oriented marketing manager in pure competition should produce that quantity which is indicated by the intersection of his
flat demand curve and his:
A. average variable cost curve.
B. total cost curve.
C. marginal cost curve.
D. average cost curve.
E. None of the above.
3
--------------------------------------------------------------------------------------------------------------------------------------18 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 18 CH
--------------------------------------------------------------------------------------------------------------------------------------22. TopKnotch Mfg. Co. has a production cost of $280. It sells its product to a wholesaler for $400. The wholesaler then sells the item to
retailers for $500 and the retailers sell the item for $1,000. Which of the following is true about this "markup chain?"
A. The wholesaler's markup is 25 percent.
B. The manufacturer is taking a markup of 30 percent.
C. The retailers' markup is 100 percent.
D. All of the above are true.
E. None of the above is true.
23. Which of the following prices is most likely to be seen if a firm is using odd-even pricing?
A. $9.00
B. $2.03
C. $6.60
D. $99.95
E. $100.00
24. Regarding pricing:
A. the use of prestige and psychological pricing shows that most retailers do not consider demand when setting prices.
B. bait pricing tries to attract customers on the high end of a demand curve.
C. the FTC considers bait pricing a deceptive act and has banned its use in interstate commerce.
D. leader-priced items are priced very low to get customers into the store—not to sell these items.
E. All of the above are true.
25. Regarding break-even analysis, a good marketing manager knows that:
A. a high fixed-cost contribution per unit will lead to high profits.
B. assuming a straight-line total revenue curve incorrectly suggests that any quantity can be sold at the assumed price.
C. break-even analysis is useless for comparing pricing alternatives.
D. the usual straight-line total cost curve applies only when economies of scale exist.
E. All of the above are true.
26. A producer makes an item for $32 and sells it with a 50 percent markup to a wholesaler. The wholesaler then applies a 20 percent
markup. A retailer then uses a 60 percent markup. The final retail selling price is:
A. $200.00.
B. $73.60.
C. $64.00.
D. $80.00.
E. Cannot be determined without stockturn information.
27. Komatsu Mfg. Co. uses target return pricing and expects to sell 40,000 units of its product in the coming year. Its fixed costs will be
$500,000 and its variable costs will be about $20 per unit. If Komatsu seeks to earn a 20 percent return on its investment of $500,000,
what price should it charge?
A. $35.00
B. $32.50
C. $21.00
D. $22.50
E. $20.00
28. A low stockturn rate
A. is extremely good for profits.
B. decreases inventory carrying cost.
C. ties up working capital.
D. is usually linked with very low markups.
E. is typical of fresh fruits and vegetables.
29. The price per unit is $1.00. The average variable cost per unit is 60 cents. The total fixed cost is $20,000. Compute the break-even
point.
A. 75,000 units
B. 50,000 units
C. 20,000 units
D. 33,334 units
E. 20,000 units
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--------------------------------------------------------------------------------------------------------------------------------------30. A firm in monopolistic competition has "marginal revenue" which:
A. is always greater than its marginal cost.
B. is always shown above its related down-sloping demand curve when plotted on a graph.
C. is the change in total revenue which results from the sale of one more unit of a product.
D. is always positive (i.e., greater than zero).
E. All of the above.
31. Identify a disadvantage of break-even analysis.
A. It is not possible to include a target profit in this method.
B. It is not helpful for evaluating what might happen to profits in different market environments.
C. It does not consider the effect of price on the quantity that consumers will want.
D. It is not helpful for evaluating alternatives.
E. It is an extremely complicated method.
32. A retailer buys a particular product for $4. To make a profit, the retailer adds $2 to cover operating expenses and provide a profit.
The percentage markup on the $6 selling price is
A. 50 percent.
B. 33.33 percent.
C. 100 percent.
D. 20 percent.
E. 25 percent.
33. High Meadow Mfg. Co. sold its product through wholesalers and retailers—allowing the wholesalers a markup of 25 percent and
retailers a markup of 40 percent. If the retail selling price is $100 and the manufacturer's cost is $30, what markup in dollars did High
Meadow receive on the sale of this product?
A. $5.00
B. $13.50
C. $15.00
D. $10.00
E. $20.00
34. Which of the following observations is true?
A. Marginal analysis does not apply in oligopoly situations.
B. Marginal revenue drops fast in an oligopoly, at the kinked point.
C. In an oligopoly, setting the price at the level of the kink minimizes profit.
D. In an oligopoly, prices are relatively less "sticky" at the kinked point.
E. Price leadership does not occur in oligopoly situations.
35. The production cost of an automobile component is $45. The producer takes a 10 percent markup and sells the product to the
wholesaler. What is the wholesaler's cost?
A. $45
B. $5
C. $10
D. $50
E. $60
36. Break-even analysis
A. assumes that the demand curve is perfectly horizontal at the selling price.
B. reveals the price that will earn the highest profit.
C. cannot be used for comparing several different alternatives (for example, assuming different prices).
D. all of the above.
E. none of the above.
37. A firm in monopolistic competition with a down-sloping demand curve:
A. does not have to worry about price competition due to the nature of its demand curve.
B. can use marginal analysis to help it maximize profits.
C. will have to charge the "market price" which is set by the intersection of industry supply and demand.
D. could use marginal analysis to compare alternatives—but this would not help in pricing because this method focuses on selling one
more unit and therefore ignores total profitability.
E. All of the above are true.
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--------------------------------------------------------------------------------------------------------------------------------------38. Vanguard Corp. uses target return pricing and is hoping to earn a 20 percent return on its investment of $1 million during the
coming year. Vanguard sold 30,000 units last year and hopes the same quantity will be sold this year. If Vanguard has fixed costs of
$250,000 and variable costs of $10 per unit, what price should the firm set to achieve its target return?
A. $58.30
B. $60.00
C. $20.00
D. $30.00
E. $25.00
39. Which of the following observations is FALSE?
A. Competition need be considered when adding in overhead and profit for a bid price.
B. Some sellers fake their records to make costs seem higher than they really are.
C. Negotiated price is a price set based on bargaining between the buyer and seller.
D. Negotiated pricing is rare in situations where the marketing mix is adjusted for each customer.
E. Negotiated pricing is a demand-oriented approach.
40. A good marketing manager for a producer knows that the most profitable price and level of output:
A. is where the positive difference between the total revenue and total cost curves is the greatest.
B. is where the difference between marginal revenue and marginal cost is the greatest.
C. is where total revenue equals total cost.
D. is where marginal revenue is maximized.
E. Both A and C are true.
41. Which of the following observations concerning a "reference price" is true?
A. Reference price is the company's cost to produce the product.
B. Reference price is set by regulators.
C. Demand may increase if a firm's price is lower than a customer's reference price.
D. All customers have the same reference prices for the same basic type of purchase.
42. If a producer selects an output level and price where marginal revenue is equal to marginal cost:
A. marginal profit will be at its maximum.
B. total revenue will be at a maximum.
C. profits will continue to grow beyond this break-even point.
D. profit will be maximized.
E. any increase in price will cause marginal revenue to go negative.
43. A firm with a stockturn rate of 4 sells products that cost it $100,000. This requires _____ worth of inventory.
A. $25,000
B. $20,000
C. $80,000
D. $400,000
E. 50,0000
44. When a firm's average variable cost is constant—no matter how much is produced—then the firm's:
A. average cost will increase as the quantity produced increases.
B. fixed cost must be zero.
C. average cost will also be constant.
D. average fixed cost will also be constant.
E. average cost will decrease as the quantity produced increases.
45. Regarding a producer's cost structure:
A. marginal cost begins to rise at a lower level of output than average cost.
B. total fixed costs increase continuously as more units are produced.
C. average cost is the extra cost of producing one more unit.
D. average costs usually drop for awhile and then start to rise when the economies of scale "run out."
E. Both A and D are true.
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--------------------------------------------------------------------------------------------------------------------------------------46. "Average-cost pricing":
A. will result in losses if actual sales are much higher than expected.
B. might cause a firm to charge too high or too low a price—and reduce its profits.
C. usually assumes the firm will sell a larger quantity than the year before.
D. cannot be profitable—because it ignores demand.
E. All of the above.
47. Average-cost pricing
A. will result in disappointing profits when the firm sells more than it expected to sell.
B. will never lead to a higher than expected profit.
C. takes the demand curve into account when calculating a price.
D. is most likely to result in the expected level of profit when demand is inelastic within the range of possible prices.
E. All of the above are true.
48. A firm with a stockturn rate of 5 sells products that cost it $100,000. Its annual inventory carrying cost is about 20 percent of the
inventory value. What is its annual inventory carrying cost?
A. $5,000
B. $4,000
C. $8,000
D. $20,000
E. $100,000
49. Wilson sells a basketball to a wholesaler for $16, and the wholesaler applies a 20 percent markup. A retailer then applies a 33.3
percent markup. The final selling price is:
A. $24.53.
B. $30.00.
C. $25.59.
D. $28.00.
E. Cannot be determined from the information given.
50. Sellers sometimes take the auction approach and adapt it by using sequential price reductions over time. When or where is this
approach most commonly used?
A. With products that have a short life.
B. When the product supply is unlimited.
C. With heavy equipment manufacturing machinery.
D. With products that have extremely low inventory costs.
E. When competition is absent.
51. Which of the following costs decrease with increase in output?
A. Total variable cost
B. Total fixed cost
C. Total cost
D. Average fixed cost per unit
E. Sales commissions
52. Regarding markups and turnover:
A. high markups usually lead to high profits.
B. speeding turnover usually decreases profits.
C. items sold at low markups (e.g., 20 percent) cannot be profitable.
D. depending on the industry—a stockturn rate of 1 or 2 may be quite profitable.
E. All of the above.
53. Blue Ridge Weavers wants to set its selling price on an item so that the retail list price will be $50—taking into account the usual
markups of 10 percent at wholesale and 30 percent at retail. At what price should Blue Ridge Weavers sell the item?
A. $32.50
B. $31.50
C. $35.00
D. $34.00
E. $38.00
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--------------------------------------------------------------------------------------------------------------------------------------54. As output increases, average cost decreases continually because
A. average variable cost per unit is increasing.
B. average fixed cost per unit is decreasing.
C. total variable cost is increasing.
D. total variable cost is decreasing.
E. total fixed cost is reducing.
55. According to the rule for maximizing profit, the highest profit is earned at the price where
A. average cost is just less than or equal to marginal revenue.
B. average cost is just less than or equal to average revenue.
C. total revenue is just greater than total costs.
D. marginal cost is just less than or equal to marginal revenue.
E. total revenue is equal to total costs.
56. Which of the following pricing approaches should be used by a profit-oriented retailer if its demand curve is down-sloping to the right
for awhile—but then actually bends back to the left at lower prices?
A. Psychological pricing
B. Prestige pricing
C. Average-cost pricing
D. Bait pricing
E. Penetration pricing
57. A high stockturn rate:
A. is only possible with a low markup percent.
B. is likely to result in low profits.
C. reduces the inventory investment and can improve profits.
D. increases the space needed for inventory.
E. None of the above is true.
58. High markups on a product could lead to low profits when
A. competitors have higher markups.
B. there are no substitutes.
C. demand is inelastic.
D. sales dip due to high prices.
E. supply is inelastic.
59. Which of the following pricing approaches specifically considers the concept of elasticity of demand?
A. break-even pricing.
B. average-cost pricing.
C. markup pricing.
D. target return pricing.
E. None of the above.
60. A retail store advertises an SLR digital camera for $350. Once bargain hunters come to the store, salespeople point out the
disadvantages of the low-priced camera and try to convince them to trade up to a better, and more expensive, unit. This is an example
of
A. price following.
B. bait pricing.
C. odd-even pricing.
D. low pricing.
E. everyday low pricing.
61. When a firm uses "long-run target return" pricing:
A. it assumes that in some years the target return won't be earned.
B. prices tend to go up and down a lot.
C. it assumes that its plant will always produce at or close to full capacity.
D. much attention is paid to current demand when setting current prices.
E. All of the above.
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--------------------------------------------------------------------------------------------------------------------------------------62. Gabriella Sax believes that customers in her dress shop find certain prices very appealing. Between these price levels, all prices are
seen as roughly the same—and price cuts in these ranges generally do not increase the quantity sold (i.e., the demand curve tends to
drop vertically within these price ranges). Therefore, Sax prices her items as close as possible to the top of each such price range. This
is:
A. bait pricing.
B. prestige pricing.
C. leader pricing.
D. psychological pricing.
E. odd-even pricing.
63. You are considering opening a fast-food store. Your fixed costs for the required land, building, parking lot paving, kitchen
equipment, and neon sign will be $1,000,000. The variable cost will be $1.89 for servings which will sell for $2.89. How many servings
must you sell to break even?
A. 1,000,000
B. 1,200,000
C. 2,890,000
D. 189,000
E. Cannot be determined from the data given.
64. Best Buy sets its prices below other electronics stores in its service area and generally attracts more customers than the others.
Best Buy apparently hopes to earn a profit by
A. achieving status quo pricing objectives.
B. setting prices based on "value in use."
C. relying on a high margin percent.
D. being the price leader in an oligopoly market.
E. achieving a high stockturn rate.
65. Marginal analysis
A. assumes that the firm's total revenue curve is a straight line.
B. bases the analysis on the cost of the first few units sold.
C. explicitly considers demand when calculating price.
D. All of the above are correct.
E. None of the above is correct.
66. Henry has classified the following items under variable costs. Which item has he classified incorrectly?
A. Expenses for parts
B. Wages
C. Outgoing freight
D. Property taxes
E. Packaging material expense
67. When Nintendo sets a relatively low price on its game units to stimulate more demand for its game cartridges, it is using
A. complementary product pricing.
B. product-bundle pricing.
C. price lining.
D. bait pricing.
E. cost plus pricing.
68. The sum of those costs that do not change in total—no matter how much is produced—is called:
A. total fixed cost.
B. total cost.
C. total variable cost.
D. total direct cost.
E. both A and C.
69. In a typical break-even analysis, a firm's fixed-cost contribution per unit:
A. is the assumed selling price per unit minus the variable cost per unit.
B. is the assumed selling price per unit minus the average fixed cost.
C. usually decreases as the quantity produced increases.
D. is total fixed cost divided by the quantity produced.
E. usually increases as the quantity produced increases.
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--------------------------------------------------------------------------------------------------------------------------------------70. "Stockturn rate" means:
A. the number of days required to sell a given output of products.
B. the amount of time needed to sell every item in a retailer's inventory.
C. the number of times the average inventory is sold in a year.
D. the rate at which products enter and leave an intermediary's establishment.
E. All of the above.
71. Mark is trying to determine his firm's average cost per unit of production. He finds that the cost for all labor and materials is $80,000
and fixed overhead expenses are $40,000. If the company produces 20,000 items in the time period, the average cost is
A. $12.
B. $2.
C. $6.
D. $4.
E. $10.
72. A disadvantage of average-cost pricing is that it
A. does not consider historical values.
B. is a highly complicated method of pricing.
C. is rarely a useful input to pricing decisions.
D. is easy to lose money with average-cost pricing.
E. does not help understand how costs operate at different levels of output.
73. Break-even charts usually assume that:
A. total cost and total revenue curves are straight lines.
B. average variable cost is constant per unit.
C. the break-even point is reached when total cost just equals total revenue.
D. any quantity can be sold at the assumed price.
E. All of the above.
74. The typical markup (percent) is the:
A. cost of an item divided by its selling price—times 100.
B. selling price minus the cost of the item, divided by the cost of the item—times 100.
C. selling price of an item, divided by its cost—times 100.
D. selling price minus the cost of the item, divided by the selling price—times 100.
E. selling price minus the cost of the item, divided by the average fixed cost—times 100.
75. The big problem with average-cost pricing is that:
A. fixed costs are hard to estimate.
B. it ignores the firm's demand curve.
C. it doesn't consider the effect of variable costs.
D. there is no way to include a desired profit per unit.
E. None of the above is true.
76. The sum of those changing expenses which are closely related to output is called:
A. total fixed cost.
B. total cost.
C. total overhead cost.
D. total variable cost.
E. Both C and D.
77. A profit-maximizing oligopolist knows that his marginal cost curve usually intersects a:
A. marginal revenue curve that drops vertically at some price.
B. horizontal marginal revenue curve.
C. smoothly down-sloping marginal revenue curve.
D. negative marginal revenue curve.
E. S-shaped marginal revenue curve.
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--------------------------------------------------------------------------------------------------------------------------------------78. Customers are likely to be less price sensitive when:
A. the greater the total expenditure.
B. the greater their share of the cost.
C. the greater the significance of the end benefit.
D. the easier it is to compare prices.
E. None of the above.
79. Which of the following statements concerning "negotiated price" is FALSE?
A. The negotiated price is set by bargaining between the buyer and the seller.
B. Negotiated pricing is not a demand-oriented approach.
C. Bargaining may involve the whole marketing mix, not just the price level.
D. Sellers must know their costs to negotiate effectively.
E. None of the above is false.
80. Walgreens Drugstores advertises that its Tylenol prices are "the lowest in town" in order to stimulate sales of other products along
with Tylenol. This is an example of:
A. skimming.
B. value in use pricing.
C. bait pricing.
D. price lining.
E. leader pricing.
81. Identify a weakness of the average-cost approach.
A. It ignores competitors' costs and prices.
B. It does not consider historical values.
C. It does not add a reasonable markup to the average cost of a product.
D. It is not commonly used.
E. It is a complex method.
82. Some retailers commonly use prices that end in certain numbers. They seem to assume that their customers see prices with these
numbers as substantially lower. This is:
A. odd-even pricing.
B. demand-backward pricing.
C. leader pricing.
D. prestige pricing.
E. psychological pricing.
83. According to the text, the two basic approaches to price setting are
A. supply-oriented and demand-oriented price setting.
B. cost-oriented and demand-oriented price setting.
C. sales-oriented and profit-oriented price setting.
D. cost-oriented and profit-oriented price setting.
E. Average-cost pricing and break-even analysis.
84. In oligopoly situations,
A. one firm usually acts as the price leader—and orders the other firms to set the same price.
B. the best price is usually at the kink in the marginal revenue and demand curves.
C. each firm charges a different price.
D. All of the above is correct.
E. None of the above is correct.
85. Leader pricing:
A. seeks a big profit on the leader items.
B. is usually used for a retailer's major product line—to give it a competitive advantage.
C. is different from bait pricing in that the marketing manager really expects to sell leader priced items.
D. assumes that some part of the demand curve is upward sloping to the right.
E. is banned in interstate commerce.
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--------------------------------------------------------------------------------------------------------------------------------------86. Value in use pricing
A. does not vary from one product to another.
B. sets a price that will capture some of what customers will save by substituting the firm's product for the one currently being used.
C. merely sets the price at what customers expect to pay.
D. sets a rather high price to suggest high quality or high status.
E. is determined by online auctions.
87. Given the following data, compute the BEP in units:
Selling price = $2.00
Variable cost = $0.75
Fixed cost = $250,000
A. 333,334
B. 200,000
C. 125,000
D. 400,000
E. Cannot be determined with this information.
88. Total fixed cost:
A. is the sum of all expenses which are closely related to output.
B. is the sum of those costs which do not change in total no matter how much is produced.
C. may vary in the short run—but is more or less fixed in the long run.
D. is the sum of all costs of manufacturing and distributing a product.
E. would be zero if the quantity produced were zero.
89. Total cost:
A. increases directly with increases in total variable cost.
B. is zero at zero output.
C. is fixed in total no matter how much is produced.
D. increases directly with increases in total fixed cost.
E. All of the above are true except A.
90. Which of the following observations is true?
A. It is possible to include a target profit in break-even analysis.
B. For a single price, multiple break-even points are possible.
C. Break-even point cannot be expressed in dollars.
D. At break-even point, a firm will cover only its variable costs.
E. At break-even point, a firm will cover only its fixed costs.
91. An item costs a retailer $140. If a 30 percent markup is desired, what should the retail selling price be?
A. $191.00
B. $242.00
C. $182.00
D. $140.30
E. $200.00
92. With regard to bid pricing, a marketing manager should be aware that:
A. the same overhead charges and profit rates usually apply to all bids.
B. bids are usually based on inspection.
C. a big problem is estimating all the costs—including the variable and fixed costs that apply to a particular job.
D. e-commerce is of little use in bid pricing.
E. all of the above are correct.
93. The major weakness of "average-cost pricing" is that:
A. it ignores likely customer demand at different prices.
B. it usually leads to losses instead of profits.
C. average fixed cost changes at different levels of output.
D. it is too hard for most managers to use.
E. Both A and C.
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--------------------------------------------------------------------------------------------------------------------------------------94. Total variable cost:
A. is zero when the quantity produced is zero.
B. is the sum of those changing expenses that are closely related to output.
C. may decrease as the quantity produced is increased.
D. All of the above are true.
E. Both A and B are true.
95. Which of the following would NOT be included in a producer's total fixed cost?
A. Rent
B. Property taxes
C. Insurance
D. Depreciation
E. Component parts
96. Spruce Pine Mfg. Co. has total fixed costs of $300,000 a year. The owner estimates that average variable costs for its product will
be about $30 next year. The selling price to wholesalers will be $50. The break-even point is:
A. 6,000 units.
B. 10,000 units.
C. 12,000 units.
D. 15,000 units.
E. None of the above is correct.
97. Customers are likely to be less price sensitive when:
A. it is easy to compare prices.
B. someone else pays the bill.
C. the total expenditure is high.
D. there are substitutes available.
E. their share of the cost is high.
98. Given the following data, determine the break-even point in units:
Total fixed cost = $120,000
Variable cost per unit = $0.60
Selling price per unit = $1.10
A. 100,000
B. 240,000
C. 200,000
D. 218,182
E. 50,000
99. Gross margin is expressed as
A. gross sales minus accounts receivable.
B. net sales minus contribution margin.
C. net margin minus sales and operating expenses.
D. net sales minus administrative expenses.
E. net sales minus cost of goods sold.
100. The "rule for maximizing profit" is that a producer should set a price such that:
A. the difference between marginal revenue and marginal cost is the greatest.
B. marginal revenue is at a maximum.
C. average cost is at a minimum.
D. marginal profit is maximized.
E. marginal cost is just less than or equal to marginal revenue.
101. Alex's Knot Shop prices its ties at $5 intervals from $10 to $25 because most customers find these prices appealing and easier to
compare. This is:
A. prestige pricing.
B. penetration pricing.
C. price lining.
D. odd-even pricing.
E. value in use pricing.
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--------------------------------------------------------------------------------------------------------------------------------------102. Which of the following statements is true?
A. Prestige pricing is used to target government buyers.
B. With full-line pricing, all products in the company's line must be targeted at the same market.
C. Demand-backward pricing is used to target industrial buyers.
D. Value pricing can only be used by mass-merchandisers.
E. None of the above is true.
103. If a profit-oriented marketing manager doesn't know the exact shape of the firm's demand curve, marginal analysis:
A. is useless.
B. may be useful anyway—because a profitable region usually surrounds the best price.
C. will suggest the same price as break-even analysis.
D. suggests that the only sensible approach is to follow the price leader.
E. None of the above is true.
104. A markup chain:
A. only applies to consumer products, not to business products.
B. implies that a retailer must always apply a smaller markup than a wholesaler.
C. causes lower prices in longer channel systems.
D. determines the price structure in a channel of distribution.
E. None of the above is true.
105. The basic problem with the average-cost approach is that it
A. does not consider cost variations at different levels of output.
B. does not consider historical values.
C. does not add a reasonable markup to the average cost of a product.
D. is not commonly used.
E. is a complex method.
106. Break-even analysis usually:
A. makes it appear that any quantity can be sold at the assumed price.
B. suggests that profits will grow rapidly as sales volume increases beyond the break-even point.
C. is quite accurate in maximizing profit.
D. assumes a U-shaped average variable cost curve.
E. Both A and B.
107. Average fixed costs:
A. increase as the quantity produced increases.
B. decline for a while as output increases and then begin to rise again.
C. decrease steadily as output increases.
D. are less than average variable costs at all output levels.
E. Both C and D.
108. A typical break-even analysis assumes that:
A. the total revenue curve is a straight line.
B. the demand curve faced by the firm is horizontal.
C. the average variable cost is the same at different levels of output.
D. All of the above.
E. None of the above.
109. Customers are likely to be more price sensitive when:
A. the total expenditure is great.
B. they have to pay the bill themselves.
C. the end benefit isn't very significant.
D. they haven't yet spent any money related to the purchase.
E. All of the above.
110. At break-even point (BEP),
A. the firm's total revenue will equal its variable costs.
B. the firm's total sales will equal its total production.
C. the firm's total cost will equal its total revenue.
D. the firm's total profits will equal its total cost.
E. the firm's total variable costs equal its total fixed cost.
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--------------------------------------------------------------------------------------------------------------------------------------111. The BEP, in units, can be found by dividing
A. total fixed costs by the fixed cost contribution per unit.
B. total variable costs by the variable cost contribution per unit.
C. total variable costs by the fixed cost contribution per unit.
D. the assumed selling price per unit by the variable cost per unit.
E. total variable costs by target return.
112. The stockturn rate is
A. the firm's ability to meet its short-term financial obligations.
B. the number of days that credit sales remains in receivables.
C. the number of times the average inventory is sold in a year.
D. the difference between net sales and cost of goods sold.
E. the ratio of sales to inventory.
113. Which of the following observations concerning target return pricing is true?
A. It is a variation of the average-cost method.
B. It has become extremely unpopular over the years.
C. It is a demand oriented price setting method.
D. It guarantees that a firm will hit the profit target.
E. It is also called break-even analysis.
114. To maximize its profit, a producer should set a price (and produce that related output) where:
A. marginal cost is just less than or equal to marginal revenue.
B. marginal cost is at its minimum.
C. price is as high as possible.
D. total revenue equals total cost.
E. marginal revenue is zero.
115. Regarding markups and turnover:
A. supermarket operators have found that high-margin products are generally more profitable that low-margin products.
B. higher markups do not always lead to higher profits.
C. low stockturn rates increase costs by tying up working capital in inventory.
D. to earn higher profits, all firms should lower their markups and seek faster turnover.
E. Both B and C.
116. If a retailer's annual stockturn rate shifted to 20 from 5, then selling products costing $100,000 would require ______________
rather than $20,000 in working capital to carry the needed inventory.
A. $10,000
B. $80,000
C. $8,000
D. $500
E. $5,000
117. Price lining:
A. is quite similar to prestige pricing.
B. can simplify both buying and selling.
C. tends to reduce turnover rates.
D. results in larger inventories.
E. All of the above.
118. A standard markup is often set close to the firm's
A. gross margin.
B. net profits.
C. overheads.
D. operating costs.
E. competitors' costs.
15
--------------------------------------------------------------------------------------------------------------------------------------18 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 18 CH
--------------------------------------------------------------------------------------------------------------------------------------119. "Marginal cost" is:
A. always less than average variable cost.
B. more affected by fixed costs than by variable costs.
C. the change in total cost that results from producing one more unit.
D. All of the above.
E. None of the above.
120. Break-even analysis can be useful for:
A. estimating future sales.
B. setting the most profitable price.
C. comparing pricing alternatives.
D. relating assumed prices to demand estimates.
E. All of the above.
121. Which of the following applies to "value in use pricing?"
A. How much profit will the firm make?
B. How much will the customer save?
C. What does a competitor offer?
D. How much can the customer afford?
E. What is break-even pricing?
122. A marketing manager has just estimated that her firm's marginal revenue will become negative if a proposed price cut is made.
This means that:
A. demand must be very elastic.
B. marginal cost must be negative already.
C. the firm is in pure competition.
D. more units may be sold—but total revenue will be less than it would be at the higher price.
E. None of the above—a firm's marginal revenue can't be negative.
123. All of the following observations concerning markups are true except
A. they guide pricing by intermediaries.
B. they are used by most retailers and wholesalers to set prices.
C. they are a cost-oriented price setting approach.
D. they are usually stated as dollar amounts.
E. they are related to selling price for convenience.
124. Break-even analysis can show:
A. which prices will not be profitable.
B. the most profitable price for a firm's product.
C. how the firm's variable cost per unit will drop as output rises.
D. the firm's most profitable output level.
E. when a firm should cut its price to increase sales.
125. Marginal analysis
A. reveals the range of prices that should be profitable.
B. can be used to set prices, but it does not give you any idea what quantity might be sold at that price.
C. is not applicable to oligopoly situations.
D. All of the above are true.
E. None of the above is true.
126. The idea that people will pay extra for "quality" and status is the idea behind
A. price lining.
B. average cost approaches to pricing.
C. penetration skimming.
D. prestige pricing.
E. psychological pricing.
16
--------------------------------------------------------------------------------------------------------------------------------------18 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 18 CH
--------------------------------------------------------------------------------------------------------------------------------------127. The price that maximizes profit is the one that results in the greatest difference between
A. total cost and total fixed cost.
B. total revenue and total cost.
C. average cost and average variable cost.
D. total revenue and average variable cost.
E. total revenue and average fixed cost.
128. The Horizons Cycle Shop bought 3 motorcycles for $2,100, and sold each one for $1,000. The markup percent was:
A. 33 1/3.
B. 30.
C. 142.
D. 50.
E. There is not enough information to tell.
17
--------------------------------------------------------------------------------------------------------------------------------------18 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 18 CH
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18CHprvw17edso Key
1. (p. 488-489) B
2. (p. 488-489) C
3. (p. 489) E
4. (p. 492) D
5. (p. 492) B
6. (p. 492) B
7. (p. 497-498) A
8. (p. 497-498) C
9. (p. 497-498) D
10. (p. 491) A
11. (p. 500) E
12. (p. 501) B
13. (p. 505) B
14. (p. 507) E
15. (p. 500) A
16. (p. 492) C
17. (p. 499) B
18. (p. 497-498) D
19. (p. 497) A
20. (p. 488) C
21. (p. 501) C
22. (p. 489) B
23. (p. 507) D
24. (p. 507) C
25. (p. 497-498) B
26. (p. 489) A
27. (p. 496) A
28. (p. 490) C
29. (p. 497) B
1
--------------------------------------------------------------------------------------------------------------------------------------18 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 18 CH
--------------------------------------------------------------------------------------------------------------------------------------30. (p. 499) C
31. (p. 497-498) C
32. (p. 488) B
33. (p. 489) C
34. (p. 501) B
35. (p. 489) D
36. (p. 497-498) A
37. (p. 499) B
38. (p. 496) E
39. (p. 511) D
40. (p. 501) A
41. (p. 505) C
42. (p. 500) D
43. (p. 490) A
44. (p. 492) E
45. (p. 500) E
46. (p. 493) B
47. (p. 494) D
48. (p. 490) B
49. (p. 489) B
50. (p. 505) A
51. (p. 492) D
52. (p. 490) D
53. (p. 489) B
54. (p. 492) B
55. (p. 500) D
56. (p. 508) B
57. (p. 490) C
58. (p. 489) D
59. (p. 487-498) E
60. (p. 506) B
2
--------------------------------------------------------------------------------------------------------------------------------------18 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 18 CH
--------------------------------------------------------------------------------------------------------------------------------------61. (p. 496) A
62. (p. 507) D
63. (p. 497) A
64. (p. 490) E
65. (p. 498) C
66. (p. 492) D
67. (p. 509-510) A
68. (p. 492) A
69. (p. 497) A
70. (p. 489) C
71. (p. 491) C
72. (p. 491) D
73. (p. 497-498) E
74. (p. 488) D
75. (p. 493) B
76. (p. 492) D
77. (p. 501) A
78. (p. 502) C
79. (p. 511) B
80. (p. 505) E
81. (p. 494) A
82. (p. 507) A
83. (p. 487) B
84. (p. 501) B
85. (p. 505-507) C
86. (p. 504) B
87. (p. 497) B
88. (p. 492) B
89. (p. 492) A
90. (p. 497-498) A
91. (p. 488) E
3
--------------------------------------------------------------------------------------------------------------------------------------18 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 18 CH
--------------------------------------------------------------------------------------------------------------------------------------92. (p. 510) C
93. (p. 493) E
94. (p. 492) E
95. (p. 492) E
96. (p. 497) D
97. (p. 502) B
98. (p. 497) B
99. (p. 488) E
100. (p. 500) E
101. (p. 507) C
102. (p. 507-509) E
103. (p. 501) B
104. (p. 488-489) D
105. (p. 492) A
106. (p. 497-498) E
107. (p. 492) C
108. (p. 497-498) D
109. (p. 502-503) E
110. (p. 496) C
111. (p. 497) A
112. (p. 489) C
113. (p. 496) A
114. (p. 500) A
115. (p. 490) E
116. (p. 490) E
117. (p. 507) B
118. (p. 488) A
119. (p. 500) C
120. (p. 497-498) C
121. (p. 504) B
122. (p. 499) D
4
--------------------------------------------------------------------------------------------------------------------------------------18 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 18 CH
--------------------------------------------------------------------------------------------------------------------------------------123. (p. 487) D
124. (p. 497-498) A
125. (p. 501) A
126. (p. 508) D
127. (p. 501) B
128. (p. 488) B
5
--------------------------------------------------------------------------------------------------------------------------------------18 CH – MKG 300 PREVIEW QUESTIONS – PROFESSOR MOSER – PREVIEW Q’S – 18 CH
---------------------------------------------------------------------------------------------------------------------------------------
18CHprvw17edso Summary
Category
# of Questions
AACSB: 10 Org Dynamics
13
AACSB: 10 Org Dynamics; 11 Analysis for decisions
1
AACSB: 10 Org Dynamics; 8 Financial
1
AACSB: 11 Analysis for decisions
37
AACSB: 11 Analysis for decisions; 9 Value creation
2
AACSB: 2 Ethical reasoning
1
AACSB: 3 Analytical skills
7
AACSB: 6 Reflective thinking
8
AACSB: 8 Financial
38
AACSB: 9 Value creation
20
Difficulty: Hard
42
Difficulty: Medium
86
LearnObj: 1
19
LearnObj: 2
11
LearnObj: 3
26
LearnObj: 3, 4
2
LearnObj: 4
22
LearnObj: 5
23
LearnObj: 6
3
LearnObj: 7
19
LearnObj: 8
3
Perreault17e - Chapter 18
129
Question Type: Application
29
Question Type: Application; Mathematical
1
Question Type: Comprehension
56
Question Type: Definition
17
Question Type: Integrating
4
Question Type: LearnAid
1
Question Type: Mathematical
20
1