Pricing Questions and Answers
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The method in which experimenters observe the impact of an event, such as increased advertising or a sale price, on actual purchases made by experimental groups of consumers is called ____.
Buy two get one free offers are what degree of price discrimination?
Last month you bought a pair of dress shoes at Winners. You recall that you got a really good deal on them (they were on sale for 40% off the regular price) but can't remember what the regular sell...
What are the pros and cons of High active price strategy?
Pricing is made difficult by: a. firms having multiple products. b. concerns about the response of competitors. c. concerns about consumer linkages of price and quality. d. All of these choices m...
Peak-load pricing suggests that some prices are a function of: a. extensions. b. time. c. costs. d. constant elasticities. Peak-load pricing suggests that some prices are a function of: a. extens...
$2.98 is an example of: a. typical pricing. b. markup pricing. c. odd pricing. d. margin pricing.
Which of the following defines predatory pricing? a. Removing government controls over setting prices and quantities in certain industries. b. When a manufacturer sets the minimum price for its pro...
Walmart, Ikea, McDonald's and Southwest Airlines adopted the business practice of minimizing costs to pass the savings on to customers, and have advertised their companies as the low-cost leaders i...
In regard to economics, what is pricing?
In regard to economics, what is line pricing?
Montana uses a 140% markup on total cost and recently computed a selling price of $1,560 for a particular product. On the basis of this information, the product's total cost is: a. $650.00. b. $9...
If the price of output in an industry falls, firms in that industry will ______ labor. A) increase their demand for B) increase their supply of C) decrease their demand for D) decrease their supply...
Indicate whether the statement is true or false. The three major influences on pricing decisions are customers, competitors, and costs.
Predatory pricing occurs when firms deliberately set their prices ______, with the intent of driving rivals from the market. a. below average variable costs b. above average variable costs c. below...
The Mankiw text recounts a famous phone conversation between the CEOs of two rival airlines. In the conversation, one CEO suggested to the other that they both lower prices to increase the number o...
What are the major influences on a pricing decision?
Does price matching keep consumer prices lower or higher than prices would have been without price matching?
Troy Bourbon, a local bourbon distillery, initially sold its product at a premium price of $45 because the company believed consumers would view the bourbon as a prestige item. The company decided...
Describe how it is possible for a small change in the cost of purchased goods and services to have a more significant effect on profits than a large change in sales. In addition to cost savings, wh...
What types of variable and fixed costs are involved in a Ring Security Doorbell product? Briefly discuss 2 types of alternatives used in the pricing of business products that might be used with the...
Describe flydubai's pricing strategy. How do you evaluate it? Is this business model sustainable?
________ is the practice of ending prices in numbers below even dollars and cents in order to create a perception of greater value. a. Skimming approach to pricing. b. Cost-plus pricing. c. Prestig...
EDLP avoids sawtooth. What is sawtooth?
What is EDLP?
________ is a technique which greatly simplifies the pricing function by setting the same price for items with similar characteristics. a. Odd pricing b. Leader pricing c. Price lining d. Geog...
Reindeer Games, a new Christmas-themed video, pizza, and ice cream restaurant targeting families with young children, is located in an area that is also home to Chucky Cheese and a bounce activity...
Canine Couture is launching a new line of hand-stitched doggy duds made from silk, cashmere, and linen. Couture has intentionally limited production and set prices for the new line at about four ti...
A manufacturer has invested $750,000 in a new product and wants to set a price to earn a 15 percent ROI. The cost per unit is $18 and the company expects to sell 50,000 units in the first year. Cal...
How does university manage perceptions during the service process?
Consumers usually perceive higher-priced products as: a) not worth the price b) the government's fault c) being of higher quality d) none of the above
What are some consumer-oriented pricing tactics? Explain one of them with example.
Why do movie theaters typically charge matinee customers a lower price than nighttime customers?
A company uses the ____ pricing strategy when it sells a popular item at an artificially low price. a. loss leader b. anchor c. bundle d. odd-even
The Crusher Corp. charges very low prices to drive its only competitor out of business. This is an example of ____ pricing. a. demand-based b. brand c. predatory d. penetration e. loss leader
Rusty Company is considering developing a new product. The company has gathered the following information on this product: Expected total unit cost $20 Estimated investment for new product $700,000...
What is monolithic pricing?
Once a company has invested time and money developing a unique new product, to recoup some of the high R&D costs, they will likely use a ________ pricing strategy. a. skimming b. penetration c. sli...
An item that had an original price of $84.95 is on sale at 25% off. What is the sale price?
How might pricing strategies differ among carriers in competitive markets, oligopolistic markets, and monopolistic markets?
Which of the following pricing strategies is most likely to lead to long-term financial sustainability? A) Full cost B) Marginal cost C) Direct cost D) Indirect cost E) Variable cost
RooPhone Inc. uses the product cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 5,000 units of cellular phones are as follows: Variable Costs F...
Suppose the market for cable TV consists of three customers who have the following reservation prices: Assume that the marginal cost of production is $40 per channel per customer. Assume that there...
Angie's Bake Shop makes birthday chocolate chip cookies that cost $2 each Angie expects that 10% of the cookies will crack and be discarded Angie wants a 60% markup on cost and produces 100 cookies...
The Wine Emporium features wines from all over the world. Along with its wines, the firm sells "The Complete Wine Guide" for $4.99. It sells this book at a price substantially below its regular ret...
Alberton's supermarket prominently displays the prices of its brands side-by-side with prices you may pay at competing grocery stores for the same brand. Albertson's hopes to stimulate added sales...
Joe lives in Hawaii and is a frequent buyer of antiques on internet auction sites. He is used to paying higher shipping costs than his brother who lives in Colorado and who also likes to buy antiqu...
Which of the following pricing strategies would you suggest to a retailer that wishes to encourage price-sensitive shoppers to postpone their purchases until the planned time of the sale for those...
Which kind of pricing is based on how much customers are willing to pay? a. demand-based pricing b. bundling c. competition-based pricing d. cost-based pricing
Which kind of pricing is based on prices that competitors charge? a. demand-based pricing b. competition-based pricing c. cost-based pricing d. bundling
True or false? In most instances of differential pricing, demand from the segment paying the lower price arises earlier in time than demand from the segment paying the higher price.
True or false? Dynamic pricing is the tactic of varying prices over time. The success of dynamic pricing also requires the presence of different customer segments, with some willing to pay a higher...
Drug prices _______. (a) are determined by research and development costs (b) are determined by supply availability (c) are determined by how valuable they are to consumers (d) are determined by a...
True or false? In general, the price of gold is unaffected by economic conditions.
Most of the time, airline frequent flier programs upgrade high volume passengers one, three, or five days in advance. What are the differential costs of this practice?
Which of the following is an advantage of peak-load pricing? a) It allows a firm to reduce its total cost by reallocating its production. b) It allows a firm to capture the entire consumer surplus....
Which of the following is the closest example of block pricing? a) An airline providing discounts to its frequent flyers as they fly more. b) At an auction of antique furniture, each piece of furni...
Indicate whether the statement presented is true or false. Two effective pricing tactics to hold or build market share during a recession are value-based pricing and bundling.
Ready Tires features more than a dozen brands of tires in many sizes. Two of the brands are RoadPlus and Road Power. Information about the two brands follows: Road Plus Road Power Selling price: Ti...
What impact will Starbuck's market structure have on their pricing power (or lack thereof) on their goods?
What is one reason that cost-plus pricing is not considered ideal? a. This method of pricing ignores demand. b. Sellers earn a better return on their investment . c. Cost-plus pricing is fairer to...
Computer and appliance manufacturers promote service contracts. Explain this pricing strategy. What conditions are necessary to make this strategy successful in terms of increasing profits?
Cuff Caterers quotes a price of $60 per person for a dinner party. This price includes the 6% sales tax and the 15% service charge. Sales tax is computed on the food plus the service charge. The se...
During 2004, Thor Lab supplied hospitals with a comprehensive diagnostic kit for $120. At a volume of 80,000 kits, Thor had fixed costs of $1,000,000 and a profit before income taxes of $200,000. D...
A monopoly sells two products, of which any given consumer wants to buy only one (and places no value on the other good - i.e. uncorrelated reservation prices). If the monopoly can prevent resale,...
Which of the following is being described: The most extreme example of unstable prices. a. Hyperinflation b. Price stability c. Time-inconsistency problem d. Nominal anchor
True or false? All consumers prefer price discrimination to one-price pricing.
Which of the following statements about markup pricing is true? a. When a markup approach is used, the resulting price should be based solely on the computed amount. b. Everything else being the sa...
All economists believe that predatory pricing is a profitable business strategy. True or false?
Two major strategies for pricing are market skimming and penetration pricing. Describe each strategy and give a specific example illustrating its use.
True or false? One of the determinants of stock price is the future profitability of the company.
If a firm practices third-degree price discrimination, the price charged should be higher in the market where demand is: a. higher b. lower c. more price elastic d. less price elastic
What are the essential differences between two-part pricing and bundle pricing?
What is a shadow price and how can business managers use it to make decisions?
What is predatory pricing?
How is pricing determined in pure competition, monopolistic competition, and monopoly market structures?
What advanced pricing technique could be used for a car dealership?
How do consumers benefit from knowing the pricing and pricing strategies?
How can Tableau be used to assist management in making pricing and product line strategy decisions?
The pricing model for iTunes has been to price songs individually. Instead, Pandora opted to offer unlimited song playing for a monthly fee. Describe the pros and cons of each strategy. Would Pando...
Describe pricing theory and how the pricing of food commodities is affected during a pandemic such as Covid-19.
List and define two legal considerations in pricing. Provide an example of each.
In terms of pricing, what are the characteristics of skimming strategies?
Fall City Brewery sells its beer to a variety of distributors located throughout the mid-west ern portion of the United States.
Leopold Bus Company runs daily service between Bigcity and Tinytown. It calculates that the average cost per trip (wages, gas, insurance, payments on loans, etc.) is $140. Leopold sells the bus tic...
You are the manager of a firm that produces X and Y at zero cost. You know that different types of consumers value your two products differently, but you are unable to identify these consumers indi...
Getty Company manufactures a product that has a variable cost of $50 per unit. Fixed costs total $1,000,000 and are allocated on the basis of the number of units produced. The selling price is comp...
What effect does an exclusive co-brand have on customer perceptions of the retailer or designer? Does this perception change if the co-brand is discontinued?
Explain American airlines' pricing philosophy.
Talia Corp. produces digital cameras. For each camera produced, direct materials are $20, direct labor is $16, variable manufacturing overhead is $12, fixed manufacturing overhead is $28, variable...
The next winner of America's Idol will perform at the fraternity's charity event for free at your school's basketball arena (25,000-person capacity) on January 28, 2011. The school is charging your...
You run pricing at the Disney World Resort in Orlando, Florida. You have three types of consumer: Families, with two parents and two kids; Local Kids, who are just individual kids; and Couples, who...
What is "congestion pricing," and how does it attempt to reduce traffic problems?
What are some contributing demand and supply factors to the differences in fuel prices around the country?
When shopping for tires for your automobile, you notice that the manufacturer you have selected has tires for your car priced low, average, and high, based upon performance and features. This is an...
Suppose as a manager of a profitable department store you are confronted with a pricing problem. You have two types of customers: a high-end type that is willing to pay a price of $20 for a pair of...
What is a key factor that determines a firm's profitability? A) differentiation of a firm's product from other products. B) factors affecting a firm's entire market. C) a firm's average cost of pr...
London's Market Bar has a unique pricing system where a computer sets the price based on demand. When demand picks up, the computer begins to gradually reduce prices. This pricing strategy is puzzl...
What types of retailers often use a high/low pricing strategy?
Describe block pricing, segmenting, and the quantity discount practices of pricing.
Many gyms offer a mixed two-part tariff pricing scheme. One can join the gym and then have daily access at a very low cost (often, free); alternatively, one can choose not to join and pay a higher...
Video Planet ("VP") sells a big screen TV package consisting of a 60-inch plasma TV, a universal remote, and on-site installation by VP staff. The installation includes programming the remote to ha...
The profit for a product is increasing at a rate of $5200 per week. The demand and cost functions for the product are given by p = 7000 - 25x and C = 2200x + 54, where x is the number of units prod...
Agreeing with a competitor to both charge a high price for a particular product, is called price ________. a. competition b. fixing c. breaking d. manipulating
Setting a high price for a new product in order to skim maximum revenues layer by layer from the segments willing to pay the high price, is called __________ pricing. a. programmed marketing b. m...
Setting prices based on competitors strategies, prices, costs, and market offerings, is called ______ pricing. a. consumer b. foolish c. competition-based d. quadratic
People communicate with each other in the market through the effects that their decisions to buy or sell have on prices. Indicate how each of the following would affect prices: a. People who see an...
A small manufacturing company with many products will soon begin producing a new product. The new product s per-unit variable costs will equal $3.00. The company s fixed costs are currently $12,000...
Which of the four methods of price support would consumers favor least? Why?
Oreo Company budgeted the following costs for the production of its one and only product, erasers, for the next fiscal year: [TABLE] Oreo has a target profit of $150,000. The target rate of return...
Describe alternative approaches to long-run pricing decisions.
Honda Motor Company is considering offering a $2,000 rebate on its minivan, lowering the vehicle's price from $29,300 to $ 27,300. The marketing group estimates that this rebate will increase sales...
The most difficult decision that a manager will face is making decisions about: A) Sales B) Accounting C) Pricing D) Human Resources
Assess the potential problems a multinational firm could encounter using negotiated transfer pricing instead of market-based transfer pricing and make a recommendation to the firm on how to avoid t...
Discuss the distributional consequences of a price support system.
Discuss the effect of setting a fee for ranchers who use public land.
Identify the price support methods that would favor the taxpayer less.
Identify the price supporting method that the consumers favor least.
Why are economists generally opposed to price controls?
Explain predatory pricing.
Select the best math for: Actual cost to buyer per dollar A. Cash discount B. Single equivalent discount rate C. Complement D. List price E. Amount of trade discount F. FOB Shipping point G....
Every day, a bakery prepares its famous marble rye. A statistically savvy customer determined that daily demand is normally distributed with a mean of 850 and a standard deviation of 90. How many l...
Explain how predatory pricing could be a motivation for dumping.
A sports store purchases tennis racquets for $60.82 less 45% for purchasing more than 100 items, and a further 22% was reduced for purchasing the racquets in October. The racquets were sold to cust...
At a student cafe, there are equal numbers of two types of customers with the following values. The cafe owner cannot distinguish between the two types of students because many students without ear...
Imagine you are running a firm with the characteristics of a perfectly competitive firm. Describe how your firm would maximize its short-run profits.
Morales Corporation produces microwave ovens. The following per-unit cost information is available. Direct materials = $36 Direct labor = $26 Variable manufacturing overhead = $19 Fixed manufacturi...
Will's Whitewater Rafting sold 3 acres of land used in the business. The sales price was $6,000 and the adjusted basis of the land was $4,200. Will receives a down payment of $4,000 at the time of...
Which of the following pricing policies compensate customers if the firm fails to provide the best price in the market? A) Randomized pricing B) Price matching C) Beat-or-accept D) Brand loyalty
Which of the following is false? a. Transfer pricing is a strategy whereby the price of some output is transferred to a related market. b. Block pricing may be a means for a firm to extract consume...
Which of the following is incorrect? a. Two-part pricing strategies extract consumer surplus as the firm's profit. b. Under block pricing, the profit-maximizing price is the total value the consume...
The Estrada Company uses cost-plus pricing with a 0.35 mark up. The company is currently selling 100,000 units. Each unit has a variable cost of $3.50. In addition, the company incurs $186,500 in f...
People in business get ahead by exploiting the needs of their consumers. The gains of business are at the expense of suffering imposed on their customers. Evaluate this statement.
The major difference between intertemporal price discrimination and peak-load pricing is: a. intertemporal price discrimination sets prices for different periods in time b. peak-load pricing sets p...
The approach in which company under-costs its one product and over-costs its at least one product is classified as ___________.
According to the price leadership model, is the dominant firm the high cost or low cost producer in the market?
Discuss the difficulties in Average Cost Pricing.
Give the price of 1 kg of egg in Uzbekistan.
Always Round Tire has service stores in Memphis and Knoxville (which are hundreds of miles apart). The company is considering the decentralization of pricing decisions. What are the three options t...
Discuss the issues and difficulties associated with pricing in a managerial environment.
Select a specific industry and then identify and discuss a significant trend in supply or demand that directly influences management's pricing decisions.
Why would there be a difference between the price that gives maximum revenue and the price that gives maximum profit?
In 2015, New Jersey passed a law allowing Tesla to sell its electric cars directly to consumers without using authorized car dealerships. This policy will lower double marginalization in the marke...
The price of movie tickets for opening day and the few days following compared to the price 6 months later is an example of?
How can absorption costing lead to incorrect short-run pricing decisions?
You are the revenue manager for a large hotel chain and want to use dynamic pricing in pricing hotel room rentals for your hotel chain. a. Name at least two variables that you as a revenue manager...
Three economic factors have a strong bearing on strategy as it relates to where to locate disparate business functions and facilities. Which of the following is not a factor? A) cost of medical ben...
Describe the five specific methods used to determine the arm's length prices in international transfer pricing for the sale of tangible property, discussing the situations in which each method migh...
Transfer pricing should equal A) selling price. B) opportunity cost. C) total cost. D) marginal cost.
Which of the following, if true, provides the best explanation of why consumers are willing to pay a premium price for Starbucks coffee? A) Starbucks has lower costs than its competitors. B) Starbu...
If an individual is considering purchasing a Toyota Camry or a Ferrari and decides that it is worth paying the extra money for the prestige that is associated with the Ferrari, the additional money...
How is a low-cost strategy related to a differentiation strategy?
In the perceptions of consumers, low prices tend to be associated with _____. A) low-quality B) state-of-the-art technology C) fast ship times D) wide availability
Indicate whether the statement is true or false. Penetration pricing attempts to hasten market development and offers the pioneer the opportunity to use the experience curve to gain market share w...
Possible threats to the low-cost strategic position include new technology and inferior quality. Indicate whether the statement is true or false
Explain whether the following statement is true or false. Customization and convenient access are both drivers of the low-cost strategic position.
Limit pricing can be difficult to practice successfully because a. incumbents usually do better after a new firm enters by raising their prices. b. incumbents usually do better after a new firm ent...
In the United States, firms that engage in cooperative efforts to coordinate pricing a. are always in violation of antitrust laws. b. may face federal charges of illegal collusion if they cannot pr...
Offering lower prices is the best method for a small business to establish its competitive edge. Indicate whether the statement is true or false.
There are at least eight different pricing strategies for established goods and services. Explain four of those strategies and why you'd use them.
Jerry is developing a pricing strategy for an established line of home care products. His premium products are priced over $4000, his best products are in the $2540 range, and his good products are...
Many small business owners use a {Blank} strategy to move stale, damaged, or slow moving goods or to encourage shoppers to purchase merchandise before an upcoming season. \\ A) multiple pricing B...
Which of the following factors is vital to determining the effects of competition on the small firm's pricing policies? \\ A) The competitor's location B) The availability of capital for producti...
Geographical pricing includes numerous techniques, such as: \\ A) uniform delivered pricing. B) loss-leader pricing. C) markdowns. D) multiple pricing.
In {Blank} pricing, a type of geographical pricing, a small firm charges customers located in different territories different prices for the same products. \\ A) FOB factory B) uniform delivered...
Indicate whether the statement is true or false. \\ When developing a marketing approach to pricing, business owners must establish prices that are compatible with what their customers expect and a...
When a computer manufacturer offers its computer with software pre-installed, a printer, and Internet service, as all part of one price, the manufacturer is using a: A) bundling strategy. B) multip...
[{Blank}] is a technique which greatly simplifies the pricing function by setting the same price for items with similar characteristics. A) Odd pricing B) Leader pricing C) Price lining D) Geograph...
The most effective pricing strategy for small businesses is follow-the-leader pricing due to its simplicity and its ability to keep price parity for the small business. Indicate whether the stateme...
Price lining, leader pricing, and odd pricing are three geographic pricing strategies that can be used for established products. Indicate whether the statement is true or false.
Under uniform delivered pricing, a company charges all of its customers the same price, even though the cost of selling or transporting the merchandise varies. Indicate whether the statement is tru...
Uniform delivered pricing is a variation of: A) opportunistic pricing. B) leader pricing. C) geographic pricing. D) multiple pricing.
A reliable cost accounting system is necessary for accurate pricing. The traditional method of product costing, where the costs of direct materials, direct labor, and factory overhead are included,...
A common "me-too" pricing policy by which the small business owner establishes his/her prices by monitoring competitor's prices and then matching them is called: A) follow-the-leader pricing. B) be...
{Blank} pricing is when the base product is not functional without the appropriate accessory. \\ A) Captive-product B) Optional-product C) By-product D) None of the above
Indicate whether the statement is true or false. \\ A skimming pricing strategy permits a small business owner to correct pricing mistakes more quickly and easily than a penetration pricing strategy.
A. Define and explain the terms: price, price range, price ceiling, and price floor. \\ B. Why is it important to keep these terms distinct in the entrepreneur's thinking?
Indicate whether the statement is true or false. \\ Geographic pricing is a technique that greatly simplifies the pricing function.
Indicate whether the statement is true or false. \\ Captive-product pricing is when the base product is not functional without the appropriate accessory.
Which of the following statements about companies that adopt a low-cost producer strategy is true? A. They believe that people will pay more for a product that is unique in some way. B. They rely o...
Which of the following is conducive to low transfer prices from the parent company to a foreign subsidiary and high transfer prices to the parent company from a foreign subsidiary? A) political ins...
Karen Simon recently purchased a digital camera. She considered three cameras-a Sony that was priced at $239.00, a Canon priced at $319.00, and a Nikon priced at $399.00. Karen couldn't tell much d...
Most experts recommend (blank) pricing because it hinges on the perceived value of a product or service. (a) value-based (b) cost-based (c) competitive-based (d) tactical (e) strategic
True or False: In cost-based pricing, the list price is determined by estimating what customers are willing to pay for a product and then backing off a bit to provide a cushion.
What do companies do before pricing a sale of the company?
Indicate whether the following statement is true or false: The amount of control that firm managers have over setting prices in various foreign markets is considered an external factor of internati...
What is a profit center model?
Explain the various pricing strategies and tactics and provide examples of when each should be used.
In which of the following market structures is there clear-cut mutual interdependence with respect to price-output policies? A) Pure monopoly , B) Monopolistic competition, C) Pure competition, D)...
How do consumers commonly react to sale prices?
Jackson, Inc., manufactures and sells Garden Gnomes. The company is planning its prices for the upcoming
The pricing of pharmaceutical products can be controversial. A recent example is EpiPen produced by Mylan which is used to treat anaphylaxis. The retail price of an EpiPen is $300, while industry s...
Why don't airlines charge one price for a flight?
What specific economic and political "factors" may be affecting current global gold prices? Be specific in terms of key demand "determinants" and their influence on prices (in reference to demand s...
What does Kelley Blue Book value mean?
What book value do car dealers use?
The table below gives a rate schedule for a long-distance phone call between two regions using a national carrier. Explain why these different long-distance rates are contingent on the time of day.
What factors must be considered when setting prices?
In a Bertrand model of homogenous goods, each firm sets its price in response to the perceived pricing decision of other firms, thus in equilibrium, prices exceeds marginal cost. True or false?
Video Planet (VP) sells a big screen TV package consisting of a 60-inch plasma TV, a universal remote, and on-site installation by VP staff. The installation includes programming the remote to have...
Jackson, Inc., manufactures and sells Garden Gnomes. The company is planning its prices for the
A restaurant sells three wines at $30, $40, and $50 per bottle. When it adds another wine to the list at a price of $22, the sales of the $30 wine increase by 50%. This is an example of: a. context...
Movie theater prices have increased coincidentally with illegal downloading of movies off of the internet. Why?
Would it be smart for a grocery store manager to stick with a middle of the road pricing strategy for all products?
Which pricing method is demonstrated by the following statement? "Alternative Pioneering Systems concluded that consumers would be willing to pay approximately $100 for a food dehydrator. Based on...
How does a prestige pricing policy fit into a marketing mix? Would exclusive distribution be necessary?
Distinguish between leader pricing and bait pricing. What do they have in common? How can their use affect a marketing mix?
By now, most of us are familiar with Uber's pricing model. Similar pricing models are beginning to be employed by other industries. Suggest a business or industry that you believe would benefit fro...
Assume you are the manager of a firm that is currently competing primarily with one other competitor in an oligopoly market. If you want to try to eliminate your firm's primary competitor, should y...
In two-part pricing and block pricing, the key quantity is found by setting marginal cost equal to price. a. True b. False
Stores that sell wedding dresses do not typically permit photos and do not have tags in the dresses that would identify the manufacturer and style type. What is the purpose of these rules? Suggest...
Assume that you plan to open a soft ice cream franchise in a resort community during the summer months. The fixed operating costs for the three-month period are projected to be $5,650. Variable cos...
How might the market imbalances caused by an anti price gouging law be dealt with?
In a high tech industry with constant opportunities for technological innovation and product improvement that has medium to low barriers to entry, fairly low minimum efficient size of the plant rel...
Why is the price of a J.Crew jacket so much lower at an outlet mall? Explain.
Explain the significance of resource pricing in terms of policy issues.
Explain the significance of resource pricing in terms of resource allocation.
Explain the significance of resource pricing in terms of cost minimization.
Does Apple violate the law in pricing e-books? Explain.
A seller's agent is to advise their seller in times of weak or weakening pricing power to: a) avoid agreeing to a ceiling on the buyer's liability. b) request only a very small deposit from th...
Compare and contrast the output and pricing decisions, a firm that produces two products that are complements in consumption, with the output and pricing decisions of a single product firm.
Pricing behaviour in an efficient market indicates that current prices will be set so that the optimal forecast of a security's return using all available information ____ (less than, more than, eq...
In the long-run, cost-push inflation would lead to the price level being: a. higher than its original level. b. lower than its original level. c. around its original level. d. the same level as...
How does the level of competition influencing pricing policies and strategies?
If local house prices rise by $1 after local property taxes are reduced by $1, then the pre-tax-reduction equilibrium was inconsistent with the Tiebout (1956) model. True, false, or uncertain?
Seenit has just purchased a small company that specializes in electronic tuners used as a component in TV sets. Seenit is a decentralized company. It will treat the newly acquired company as an aut...
Explain how the airline industries practice price discrimination.
In order for "limit pricing" to be effective, the firm practicing such a strategy must be able to charge a price that is: A) lower than the potential entrant's ATC but greater than the firm's own A...
Limit pricing is used primarily to: A) reduce (limit) the profits of all of the firms in the industry. B) discourage new firms from entering a market. C) drive other firms out of a market. D) e...
Agency problems in the transfer pricing process are likely to lead to sales by the firm of its end product that are a) appropriate for maximizing profit, but at a price that is too high. b) appr...
Predatory pricing is used primarily to: A) drive other firms out of a market. B) discourage new firms from entering a market. C) reduce (limit) the profits of all of the firms in the industry....
Recall the kind of year football had this season, with half empty stadia for most of the games. What would be the ideal price for a football ticket at the gate of the stadium in such a situation? W...
Dynamic pricing and the creation of product addicts. Uber is an example of a company that adopts dynamic pricing. Contradictory on this we understand that the value is critical to creating product...
What are the four types of pricing challenges? How does marketing help to gain an understanding of value pricing?
What is the drawback of a marginal cost pricing rule? a) no deadweight loss is eliminated. b) the firm will suffer an economic loss. c) the gain in consumer surplus will be less than the loss in...
Which of the following could cause an industry to be an increasing-cost industry?
You are a soap retailer and your market research tells you that for 5 customers, their willingness to pay for your products are Your marginal cost of producing dish soap is $1 and your marginal cos...
Which of these is an example of the line, marked "Artificial Price?" a. Farm subsidies b. Market price c. Minimum wage d. Rent controls
What is the difference between variable ticket pricing and dynamic ticket pricing?
Jimmy works in a kitchen supply store that sells kitchen fixtures, products, and accessories. He helps the store's owner buy new products and prices the merchandise for sale. During their spring...
Which of the following can account for a decrease in the demand for peanut butter, a normal good? a) An increase in the supply of peanut butter. b) An increase in consumer income. c) A drought i...
Explain how congestion pricing would alter traffic flow at an airport.
Patient A lives in a country where lawyers are paid on a contingency fee basis. Patient B lives in another country where contingency fees are prohibited and lawyers are paid by the hour. If the pro...
The protection of endangered species has long been argued to be a good example of a public good. In a recent study that surveyed Americans, it was estimated that their overall willingness to pay to...
"New York, NY (AP, Nov. 20, 2017) - Salvador Dali's iconic painting, "The Persistence of Memory" of 1931 - considered the Catalan surrealist's most universally recognized work and originally sold t...
Provide a real-world example of a pricing strategy for a specific company by identifying its market structure.
Price transmits information about a good. If price rises, then it is transmitting information that the good _____.
Barnacle Industries was awarded a patent over 13 years ago for a unique industrial-strength cleaner that removes barnacles and other particles from the hulls of ships. Thanks to its monopoly positi...
A company's managers should probably give serious consideration to changing from a low cost/low price strategy for entry-level cameras to a different strategy when
A mean of the price-to-income ratio has been used by commentators to evaluate whether house prices might be too high (or too low). Why is this not a good measure? Would a rent-to-income ratio be be...
Does Ford Motor Company charge the same prices for its products that are being marketed to specific countries? Why are different prices quoted in different currencies?
What will happen to a bakery if a large retailer like Coles or Woolworths establishes a new store in a location close by and decides to price bread below cost as an opening special to attract custo...
Answer true or false and explain: Dynamic pricing is an economist's dream come true.
Administered pricing schemes can create incentives for producers to act more efficiently. Discuss at least 5 ways that hospitals can respond to the implementation of the Medicare Prospective Paymen...
Which of the following statements is true? The price system: (a) acts as signals for providing incentives and disincentives for buyers and sellers (b) provides information for buyers and sellers of...
Assume that the state and territory governments throughout Australia increase the price of water in an attempt to reduce consumption for domestic use. What are the equity considerations with this p...
Is a contribution margin analysis sufficient enough to base pricing off of? Fixed costs should be covered as much as possible, but some operations may allow for only variable costs to be covered in...
The government's right to a price adjustment may be affected by which of the following circumstances? A. The contract was based on an agreement about the total cost of the contract, and there was n...
Which of the following is a correct statement? a) Both purely competitive firms and monopolistic firms are "price takers". b) Both purely competitive firms and monopolistic firms are "price makers"...
Which of the following conditions is not necessary in order for a firm to price discriminate? a) The product cannot be resold. b) The firm must have some market power. c) The firm must have many bu...
The 1919 model by Poltrona Frau is considered by many to be the most beautiful armchair in the world. The armchair can also be bought with a plate. Because of exchange rate risk and some other cons...
What are the ways a company can increase profits, other than by controlling costs? Elaborate your answer with citations.
A law is passed allowing shops to limit refunds on returned items to 50 percent of the original price. Discuss how shops might adjust their prices in response to this.
A retailer you are working for sells beer only in 12-bottle packs. You would like to suggest to the management making 6-bottle packs available for sale in addition to that. Discuss the implications...
What are the most important factors influencing transportation cost and pricing?
An economy's aggregate demand curve shifts leftward or rightward by more than changes in initial spending because of the A. net export effect B. wealth effect C. real-balances effect D. multiplier...
Suppose Starbucks increases the price of a cup of coffee. How does this affect the demand for Starbucks coffee? What about the quantity demanded?
Distinguish between retrospective and prospective payment. Provide an example of each.
According to the table, if Tampa and Boston were to trade white beans and naked beans, what is the range of possible prices (i.e., prices acceptable to both locations) for a can of white beans? Nu...
Explain the inverse elasticity rule (Ramsey Pricing).
In the specific factors model, a 5% increase in the price of food accompanied by a 0% increase in the price of cloth will cause wages to __, the production of cloth to __ and the production of food...
a. What strategy is Mulally trying to get Ford to pursue with his One Ford initiative? b. What are the benefits of this strategy?
a. How would the strategy characterize for competing internationally that Ford was pursuing prior to the arrival of Alan Mulally in 2006? b. What were the benefits of this strategy? c. What were t...
Which of the following are principles used in setting public utility rates? a. Utilities are only allowed to put prudently incurred costs into rates, b. Once rates are set the rates cannot be res...
Which statement is true? To compete on the basis of a no frills strategy businesses like Aldi, Lidl and Easyjet: a. Reduce costs in the business by removing some cost elements like food on flights...
Indicate whether the statement is related to heterodox or neoclassical economics: Prices are set in advance of (that is, before) market trading.
Most fast-food restaurants offer "value" meals which include a drink, sandwich, and fries for a price that is about the same as if you purchased two of those three separately. Explain why they do t...
What is the difference between subsidy and minimum support price?
Why are take-out items at restaurants cheaper than dine-in? Why are similar items on the lunch menu cheaper than on the dinner menu? Discuss how the issue of internal firm costs (and production) af...
You work for ABC Plumbing and receive a catalog from one of your suppliers. The cover page states: "Catalog developed for our most valued customer, ABC Plumbing." What observations would you make a...
Explain why first class costs so much on airplanes and why economy class is getting more and more uncomfortable.
In 2014 Nike initiated a new pricing strategy. The company determined from a market analysis that its customers appreciated the value that the brand provided, which meant that it could charge a hig...
How do you find the quantity/price effect for a monopolist?
Can a model that includes just money price miss relevant prices? Why or why not? a. Yes. Such a model might ignore the possibility that the government could implement programs such as price ceilin...
In addition to the market-risk premium and a firm-size factor the Fama and French model adds what?
Which of the following pricing policies best identifies when a product should be expanded, maintained, or discontinued? a) Full-cost pricing policy. b) Target-pricing policy. c) Marginal-pricing...
Electricity pricing that varies in its billing expense throughout the day is called: a) full pricing. b) marginal cost pricing. c) dynamic pricing. d) variable pricing. e) Full cost pricing.
What is the difference between external and internal pricing?
Movie theaters, airlines, and many other businesses like to charge customers different prices based on time of the day, age, and purchase dates. Explain why.
Price-matching guarantees usually seem to be pro-competitive. Explain what a price-match guarantee is.
(i) A legally acceptable reason for offering different prices to different customers would be differences in Blank. (cost/race/willingness to pay/ gender) (ii) A legally unacceptable reason for...
Why do gas stations in the middle of town typically charge a little less for gasoline than do gas stations located on interstate highway exit ramps?
How does a target cost relate to price?
How do you calculate the markup on cost of goods sold? Is the markup pure profit? Explain.
Two firms in town sell yarn. Both advertise that they will beat their competitor's price. Why might such a guarantee lead to higher prices?
Does "surge pricing" successfully balance the demand and supply condition for Uber? Is surge pricing fair to consumers? Can surge pricing be applied to other businesses or industries? Apply your de...
Consider the market for 2 Pencils. In a market economy, only those consumers who are willing and able to pay for pencils get pencils, is this fair? What about the market for health care?
Suppose you are the assistant to the CEO of Proflex, a streaming service for historical classic, legendary games in all college and professional sports, updating its content each month (much like N...
Describe a pricing decision your company (you can imagine any company) has made. Was it optimal? If not, why not? How would you adjust the price? Compute the profit consequences of the change.
How is marketing related to the pricing? Is pricing a part of branding?
Why is it optimal for a firm to set a pricing structure that intentionally shuts the low-type consumer out of the market?
How would a low-cost price leaders enforce its leadership through implied threats to a rival? Provide at least one example of such a strategy.
Explain if the following pricing strategy makes sense. Hewlett Packard subsidizes purchase of printers and makes money on the ink.
Explain if the following pricing strategy makes sense. Costco uses an entry fee (membership fee) and then charges P = MC.
What are economic profit-maximizing strategies that may be made by a perfectly competitive firm?
Define the term, "Trend Line."
Find 1 successful example of a pricing model and 1 unsuccessful pricing model. What made the model successful/unsuccessful?
What is the break-even price in economics?
What is a price war in economics?
What is predatory pricing in economics?
How does full cost pricing help create economic sustainability?
A strategy that can be followed to drive firms out of an industry and/or scare off potential entrants to maintain market power of large firms is: a) Average cost pricing b) Marginal cost pricing...
Why is the price higher when a product is first introduced than after months or years?
Explain in your words the difference between the power to make a Take it or Leave It Offer and price setting power in terms of: (i) The variables the possessor of power has control over (ii) How th...
If a firm engages in predatory pricing, it A) is following marginal cost pricing. B) is following average cost pricing. C) is guilty of price-fixing. D) it has been regulated using a price cap....
What global policy is the best to apply to a pricing strategy in Mexico (ethnocentric, polycentric, geocentric)?
What is shadow price?
What is "skimming?"
Explain the concept of predatory pricing, and give an example of a company who has been accused of these unethical practices.
3 Mattel is planning to produce a new line of action figures that correspond to a soon-to-be-released movie. They know that sales of action figures will dramatically increase while the movie is in...
Compare and contrast the various pricing policies used by companies.
Why would a company seek to position themselves as a low price or high price item in the market place? How might this affect sales dollars, sales volume, and profits?
Generally, pricing theory suggests that a hospitality operation should price its rooms and its food and beverage menu items to control costs and maximize profit, while at the same time offering gue...
If All-City Sports is being charged a higher price for the baseball, softball, and soccer equipment by Haskins Manufacturing than the manufacturer charges larger firms, of what practice would All-C...
MULTIPLE CHOICE: Choose the one alternative that best completes the statement or answers the question. Stock prices are: A) set by the central bank. B) determined by market transactions. C) se...
An item is $99.50 and is 30% off. What will its sale price be?
As you market yourself to employers, the salary you demand is essentially your personal price. Keeping that in mind, what pricing strategy should you follow (penetration, skimming, or competitive)?...
Discuss the impact of the Internet on Global Pricing Strategies of firms with specific reference to Internet Pricing and Brick and Mortar pricing.
1. What is advantages and disadvantages of arbitrage pricing theory? 2. What the advantages of using the Arbitrage Pricing Theory? 3. The numerical based on arbitrage pricing theory.?
Can a company use a target pricing model without a follow-on cost-savings sharing agreement? Why or why not?
The APT itself does not provide guidance concerning the factors that one might expect to determine risk premiums. How should researchers decide which factors to investigate? Why, for example, is in...
When companies are price-setters, their products and services: a. are priced by managers using a target-pricing emphasis. b. tend to have a lot of competitors. c. tend to be commodities. d. tend to...
The Engine Division provides engines for the Tractor Division of a company. The standard unit costs for Engine Division are: Direct materials = $600 Direct labor = 1,200 Variable overhead = 300...
Based on the following industry averages for price multiples and select firm information, relative to its competitors at what price should XYZ trade according to industry data? XYZ information P/...
The simplest pricing method is ________. a. going-rate and sealed-bid pricing b. cost-plus pricing c. break-even analysis d. target return pricing e. value-based pricing
Consider the following questions related to empirical tests of the APT: a. Briefly discuss one study that does not support the APT. Briefly discuss a study that does support the APT. Which positi...
1. What happens if a supplier cannot meet a purchaser's initial target price? 2. How is this issue resolved?
Describe one example of a situation in which a company might adopt a pricing objective other than profit maximization. Provide two supporting facts.
An online buying club offers a membership for $120, for which you will receive a discount of 10 percent on all brand-name items you purchase. How much would you have to buy to cover the cost of the...
Which of the following transfer price policies would generally not be appropriate? (a) Negotiated (b) Market price (c) Standard (budgeted) cost (d) Actual cost
Knowing how the capital asset pricing model functions and how the abridged pricing theory functions, give an example of using the capital asset pricing model and an example of using the abridged pr...
Websites of budget airlines frequently offer special fares and flights to selected destinations. A decision to run a brief fare special is an example of a managerial decision. Discuss the type of...
1. How is the price of an asset determined according to the standard asset pricing theory? (You may assume that investors hold on to the stock indefinitely.) 2. What is the no-arbitrage condition a...
________ is a short-term strategy that assumes that competition will eventually emerge. a. Life cycle pricing b. Odd pricing c. Price lining d. Penetration pricing
Time Warner could offer the History Channel (H), and Showtime (S), individually, or as a bundle of both. Suppose the reservation prices of customers 1 and 2 (the highest prices they are willing to...
Pick one MARKET in which the price system does not produce an equitable price and quantity of output.
who knows how to measure the true cost of a pint of B-Positive blood? A.None of these B.Any competent medical authority C.Only the Surgeon General of the United States D.An economist E.A clerk at t...
IPO Pricing. The Zipcar IPO was underpriced by about 56 percent. Should Zipcar be upset at... 1 answer below IPO Pricing. The Zipcar IPO was underpriced by about 56 percent. Should Zipcar be upse...
What exactly is perception, as it relates to consumers? Is perception more important than the facts, to many consumers? Why or why not? What are some of the factors that impact consumer's perceptio...
A business can produce its product in different versions. version A has a basic design and a lower cost and Version B has an upgraded design and a higher cost of production. The business knows ther...
How much does a haircut for children cost in India?
What are some of the examples of price ceilings in India?
What are some products we get for much cheaper in US, than In India?
Why are prices so similar between companies for cars of the same type and class and doesn't that imply a kind of pricing monopoly?
What's the difference between dynamic pricing and price discrimination?
Dynamic Pricing: Would it be feasible to sell digital goods with an algorithm that tracks sales and automatically adjusts for maximum revenue?
Is it anti-capitalist to charge different prices for the same product?
What is the reason behind the low price of Chinese products?
Why are products (even non-American products, e.g. electronics) always cheaper in the US, compared to Europe?
Why are audiobooks so expensive vs. hardcover and eBooks?
What example is there of an oligopoly in a market with low barriers to entry, or where firms engage in limit pricing?
Why are real estate prices the perfect indicator of the business cycle, the monetary policy, and commodity prices?
What can you say about modern Price Theory? I mean, from which parts are price formed? We all understand that marginal utility and labour spending don't meet reality. So, is there some alternative...
How can companies with fixed prices, like dollar tree, stay afloat if inflation rates generally rise every year?
How does Daiso sell all its products at the same price (usually a very low one) under one roof?
What is the reason behind keeping the price of products ending with 999, 99, 9?
What is the average cost of producing a barrel of WTI crude oil if supply equaled the global demand for oil?
What is the economic theory when large companies cut prices to gain monopoly in a market and then increase prices after gaining the monopoly?
How do market structure and related strategic and pricing decisions affect Sibanye gold profitability and the gold mining industry in general?
What is a good pricing strategy for an e-tailer, if margins are really small, and competitors are engaging in a price war?
What are the economic and social consequences of shortages and surpluses?
Microeconomics: How does a business set the prices it charges for each of its goods & services?
How can the food outlets in Indian multiplexes charge exorbitant rates (100+ rupees) for food items that cost much lesser, like popcorn and a bottle of Pepsi? Why does it cost so much?
When the price equals marginal cost, what happens?
Why is bottled water so much more expensive than soda?
If nicotine in cigarettes is highly addictive, why would it make economic sense for producers of cigarettes to offer free samples of their products to young adults?
What is the difference between marked price and cost price?
Why do soft drink makers sell them at such exorbitant prices in the market?
What are some clever examples of relationship-based pricing tier names for a financial institution?
You have just been hired as a manager for a new health spa in Retirement Village. The owner has commissioned a market study that estimates the average customer?s monthly demand curve for visiting t...
1.Which of the following statements about price discrimination is TRUE? A.Price discrimination is a way for firms to extract some consumer surplus as an additional profit. B.Price discrimination in...
Pricing Strategy Is the Right Price a Fair Price? Prices are often set to satisfy demand or to reflect the premium that consumers are willing to pay for a product or service. Some critics shudder,...
A single firm that charges the monopoly price in the market earns $800. If another firm successfully enters the market, the incumbent's profits fall to $500 and the entrant earns $450. If the incum...
Publishers versus Authors. Consider the problem of setting a price for a book the marginal cost of production is constant at $20 per book the publisher knows from experience that the slope of the d...
Please provide specific examples of at least three internal and/or external conditions within a company that could be related to the theory of price. How might this affect daily operations? Short-t...
Hill Industries had sales in 2016 of $6,800,000 and a gross profit of $1,100,000. Management is considering two alternative budget plans to increase its gross profit in 2017. Plan A would increase...
Schopp Corporation makes a mechanical stuffed alligator that sings the Martian national anthem. The following information is available for Schopp Corporation's anticipated annual volume of 501,000...
What are the three major pricing strategies used by? marketers?
Consider the following multifactor (APT) model of security returns for a particular stocl. Inflation Factor Beta 1.7 Factor Risk Premium 5% Industrial production Factor Beta 1.3 Factor Risk Premiu...
Our customers who choose to keep a car for an extra day are currently paying the same base daily rate in general. Do you see any potential in exploring alternative schemes? If so, what changes sh...
______ refers to how quickly information is reflected in the available prices for trading. A. Informational efficiency B. Market efficiency C. Mechanical efficiency D. Operational efficiency
Explain the economic reasoning underlying the following statement: "People often fail to acquire information about the price they pay for medical services because of health insurance."
Bryant Company sells glass vases at a wholesale price of $2.6 per unit. The variable cost of manufacture is $0.35 per unit. The monthly fixed costs are $9,000. Bryant's current sales are 25,000 uni...
Explain which advanced pricing techniques would be most appropriate for each of the following firms. A complete explanation should be at least 50 words for each section. a) Microsoft which offers s...
The market price for low-end laser printers is well established at $400 per unit. ABC Technologies is considering entering this market and has enough available space in its plant to accommodate a n...
Prestige Pricing. Ponce Company is considering the production and sale of a new product with a fixed cost of $27000 and a variable cost of $5 per unit. Based on the normal profit margins Ponse des...
a. The Single Index Model (SIM) is a univariate (one independent variable) regression model of stock/portfolio excess returns. What are the differences between the SIM and the CAPM? b. Describe how...
Why is predatory pricing unlikely to occur when all firms are identical?
1. Which of the following statements about the Arbitrage Pricing Theory (APT) is correct? Check all that apply. a) The APT requires fewer assumptions than the Capital Asset Pricing Model (CAPM)....
A retailer buys a pair of socks that were originally priced at $1 a pair including the manufacturer's profit margin of 7%. The exporter takes only a 3% margin on the socks, the wholesaler takes a 5...
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