MKT 310 WK 10 Quiz 8 Chapter 17,18

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1) The sensitivity of consumers to price changes is measured by the ________.

A) law of demand

B) sales to price coefficient

C) coefficient of elasticity

D) price elasticity of demand

2) A relatively small percentage change in the price of a computer results in large percentage changes in the number of units purchased for a retailer. The price elasticity of demand for computers can be described as ________.

A) price elastic

B) unitary elasticity

C) price inelastic

D) low

3) When the price elasticity of demand is high and prices go up, total ________.

A) revenues stay the same

B) revenues decline

C) revenues increase

D) profits increase

4) When the price elasticity of demand is unitary and prices go down, total ________.

A) revenues stay the same

B) revenues decline

C) revenues increase

D) profits increase

5) Price elasticity of demand is negative since ________.

A) consumers are generally price conscious

B) quantities sold decline as prices increase

C) there are few status-oriented consumers

D) most retailers use markup pricing

6) Horizontal price fixing involves an agreement ________.

A) to charge retail firms lower prices in areas with an undesirable competitor

B) by any channel member not to sell merchandise below cost

C) among manufacturers, among wholesalers, or among retailers to set prices

D) by retailers to charge the price level suggested by manufacturers or wholesalers

7) In vertical price fixing, ________.

A) channel members conspire to set retail prices at given levels

B) channel members agree not to sell merchandise below their cost

C) retailers have no intention of selling advertised goods

D) manufacturers or wholesalers are able to control the retail prices of their goods and services

8) The intent of vertical price-fixing legislation was to protect ________.

A) large retail chains

B) small manufacturers

C) small, full-service retailers

D) final consumers

9) Manufacturers and wholesalers can legally control retail prices by ________.

A) charging price-cutting retailers higher prices

B) limiting sales to interstate commerce

C) using consignment selling

D) refusing to sell to price-cutting retailers

10) Price-discrimination legislation is designed to limit the ability of ________.

A) retailers to charge less than a manufacturer's or wholesaler's suggested list price

B) manufacturers and wholesalers to grant large discounts or favorable terms to large retailers when the discount could not be justified by cost savings

C) manufacturers, wholesalers, and retailers from conspiring to fix retail prices

D) manufacturers from setting artificially-low prices with the intent of destroying competition

11) Price discrimination is legal under the Robinson-Patman Act when ________.

A) different brand names are placed on a product

B) lower prices are offered in the form of favorable purchase terms (such as credit allowances)

C) a large customer threatens to cancel an order unless the seller reduces its price

D) price differences are equal to or less than a supplier's cost savings

12) In predatory pricing, large retailers attempt to destroy smaller retailers by ________.

A) vertical integration

B) conspiring with manufacturers to refuse to sell to smaller retailers

C) selling goods at very low prices (sometimes even below cost)

D) providing free warranties with selected goods

13) Retailers typically use loss leaders to ________.

A) increase store traffic

B) switch customers to other goods with higher profit margins

C) increase their bargaining power with select suppliers

D) practice opportunistic buying

14) Unit pricing laws are necessary because of ________.

A) deceptive price advertising by retailers

B) scanning and the Universal Product Code

C) item-price removal by supermarket chains

D) the presence of many different-sized packages

15) Item price removal enables supermarkets to ________.

A) mark prices for goods on shelves or signs and not on individual items

B) charge the higher of two prices, if two prices are on a single package

C) sell goods for below cost if they are matching a nearby competitor

D) selectively mark prices on "key" items only

16) A retailer typically has no intention of selling a promoted good or service in ________.

A) unit pricing

B) item price removal

C) price discrimination

D) bait-and-switch advertising

17) Which strategy does not enable a retailer to control retail prices?

A) stocking private brands

B) selling gray market goods

C) selling pre-sold manufacturer brands

D) centralizing purchases with few manufacturers

18) In selling against the brand, ________.

A) manufacturer brands are given secondary shelf-space locations

B) retailers require slotting allowances from manufacturers for shelf space

C) retailers disparage manufacturer brands

D) retailers charge artificially high prices on manufacturer brands in order to sell their own private labels

19) In price guarantees, a manufacturer protects a retailer by ________.

A) indemnifying it for any antitrust action against the firm caused by the manufacturer's illegal action

B) refunding the difference if a retailer must lower its retail price

C) offering to sell its private-label merchandise if required

D) refusing to sell to price-cutting retailers

20) Individual retailers have no control over the setting of retail prices in ________.

A) deregulated market pricing

B) market pricing

C) administered pricing

D) government-controlled pricing

21) A retailer able to develop a strongly differentiated retail mix can utilize ________.

A) pricing at the market

B) pricing below the market

C) deregulated market pricing

D) administered pricing

22) An aggressive low-price strategy designed to sell a high volume of goods is ________.

A) market skimming pricing

B) market penetration pricing

C) the price-quality association

D) markup pricing

23) Market penetration is an appropriate strategy when ________.

A) a retailer seeks to attract consumers less concerned with price and more concerned with service, assortment, and status

B) new competitors are unlikely to enter the market

C) low prices discourage actual and potential competition

D) early recovery of cash is a goal of the retailer

24) The price floor represents the ________.

A) highest price a consumer will pay

B) lowest acceptable price to a retailer

C) lowest competitor's price

D) lowest minimum price that is legal according to sales-below-cost laws

25) Which of the following suggests that too low a price may hinder demand?

A) bait advertising

B) sales-below-cost laws

C) prestige pricing

D) predatory pricing laws

26) The most widely practiced retail pricing technique is ________.

A) cost-oriented pricing

B) prestige pricing

C) competition-oriented pricing

D) demand-oriented pricing

27) Markups in retailing are typically computed on the basis of ________.

A) merchandise cost

B) merchandise cost plus freight

C) retail selling price

D) retail selling price plus freight

28) The difference between initial markups and maintained markups is due to ________.

A) different terms offered to larger customers

B) seasonal discounts

C) markdowns, added markups, shortages, and discounts

D) revisions in planned profits

29) Direct product profitability (DPP) is an example of ________.

A) a variable markup policy

B) pricing at the market

C) administered pricing

D) unit pricing

30) Which pricing strategy seeks to stabilize demand throughout the year?

A) variable pricing

B) everyday low pricing (EDLP)

C) one-price policy

D) flexible pricing

31) A retailer that seeks to alter prices to reflect fluctuations in costs or consumer demand should practice ________.

A) variable pricing

B) customary pricing

C) a one-price policy

D) price lining

32) The opposite of setting prices by negotiation or bargaining is ________.

A) leader pricing

B) odd pricing

C) customary pricing

D) a one-price policy

33) In which pricing technique does a retailer advertise and sell key items in the product assortment at less than the usual profit margin?

A) price lining

B) leader pricing

C) odd pricing

D) bait-and-switch advertising

34) A retailer sells men's suits for $179, $229, $309, and $359. This illustrates ________.

A) price lining

B) leader pricing

C) odd pricing

D) bait advertising

35) A major advantage of an early markdown policy is that ________.

A) consumer interest is heightened during storewide clearances

B) merchandise offered for sale is fresh

C) goods can be resold during next season without any need for a price reduction

D) the retailer has greater opportunity to sell the good

36) Price elasticity is ________ when the urgency for a purchase is low and the number of acceptable substitutes is high.

A) inelastic

B) elastic

C) unitary

D) positive

37) Total demand for a movie drops from 400 to 350 units when a theater operator increases the ticket price for a popular movie from $7 to $9. Price elasticity of demand (expressed as a positive number) equals ________.

A) 0.125

B) 0.53

C) 0.67

D) 2.50

38) When a stationery store increases its price for a popular computer notebook from $1,000 to $1,250, its quantity demanded decreases from 400 to 250 per month. Its price elasticity of demand (expressed as a positive number) equals ________.

A) 1.11

B) 2.07

C) 2.30

D) 2.50

39) A negatively-sloped demand curve means that ________.

A) the price elasticity of demand is negative

B) demand is elastic

C) demand is inelastic

D) demand is unitary

40) The difference between horizontal price fixing and vertical price fixing is based on ________.

A) whether the channel members are at the same level

B) the legality of the resulting prices

C) the effect on final selling prices

D) whether collusion is involved

41) Many manufacturers feel that vertical price fixing should be legal since it protects ________.

A) large chain organizations

B) final consumers seeking lower prices

C) manufacturers seeking large promotional budgets for innovative products

D) a brand's image that may be hurt from repeated price cutting by retailers

42) The Robinson-Patman Act was developed to ________.

A) provide lower prices to final consumers

B) make price conspiracies between channel members illegal

C) allow smaller retailers to receive similar prices to large retail chains that had high bargaining power

D) limit price competition among retailers

43) Loss leaders are viewed as being particularly attractive by many retailers since they ________.

A) generate consumer store traffic throughout the store

B) ultimately destroy small, marginal competitors

C) are legal

D) are not forms of deceptive advertising according to FTC guidelines

44) A key difference between a loss leader and leader pricing is based upon whether ________.

A) the goods are sold above cost

B) bait advertising is used as part of the retailer's strategy

C) sufficient customer traffic is generated

D) competing retailers are hurt by the action

45) A key difference between loss leaders and bait-and-switch advertising is based upon whether ________.

A) the strategy is legal

B) competitors are hurt by the offer

C) the retailer intends to sell the advertised good or service

D) ample store traffic is created by the strategy

46) The key difference between bait-and-switch advertising and "trading the customer up" to a more expensive substitute is that in "trading the customer up," the advertised low-price good ________.

A) is sold below cost

B) is available for sale at the advertised price

C) is disparaged

D) must be specially ordered

47) Selling against the brand and private labels are two strategies retailers use to ________.

A) increase consumer price elasticity

B) create nonprice competition

C) generate price competition

D) assert channel power

48) A retailer has the least control over retail price setting in ________.

A) a price war

B) a regulated pricing situation

C) an administered pricing situation

D) market pricing

49) Administered pricing utilizes ________.

A) nonprice competition

B) price guarantees

C) quantity and seasonal discounts

D) bargaining power

50) Administered pricing can be used in association with ________.

A) market penetration

B) price wars

C) market skimming

D) elastic demand

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