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Special Education
University
Pricing Decision and Cost Management
100 questions
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- 1. Multiple Choice
Major influences of competitors, costs, and customers on pricing decisions are factors of
supply and demand
activity-based costing and activity-based management.
key management themes that are important to managers attaining success in their planning and control decisions.
the value-chain concept
- 2. Multiple Choice
Short-run pricing decisions include
pricing a main product in a major market
considering all costs in the value chain of business functions
adjusting product mix and volume in a competitive market while maintaining a stable price if demand fluctuates from strong to weak.
pricing for a special order with no long-term implications
- 3. Multiple Choice
Burkhart Company manufactures a product that has a variable cost of $25 per unit. Fixed costs total $1,000,000, allocated on the basis of the number of units produced. Selling price is computed by adding a 25 percent markup to full cost. How much should the selling price be per unit for 200,000 units?
$31.25
$42.00
$37.50
$30.00
- 4. Multiple Choice
The first step in implementing target pricing and target costing is
choosing a target price
determining a target cost.
developing a product that satisfies needs of potential customers.
performing value engineering
- 5. Multiple Choice
The best opportunity for cost reduction is during the
manufacturing phase of the value chain.
product or process design phase of the value chain.
marketing phase of the value chain.
distribution phase of the value chain.
- 6. Multiple Choice
Each month, Haddon Company has $275,000 total manufacturing costs (20 percent fixed) and $125,000 distribution and marketing costs (36 percent fixed). Haddon’s monthly sales are $500,000.
The markup percentage on full cost to arrive at the target (existing) selling price is
25 percent.
75 percent.
80 percent.
20 percent.
- 7. Multiple Choice
Each month, Haddon Company has $275,000 total manufacturing costs (20 percent fixed) and $125,000 distribution and marketing costs (36 percent fixed). Haddon’s monthly sales are $500,000
The markup percentage on variable costs to arrive at the existing (target) selling price is
20 percent.
40 percent.
80 percent.
66 2/3 percent.
- 8. Multiple Choice
The price of movie tickets for opening day and the few days following compared to the price six months later is an example of
price gouging.
peak-load pricing.
dumping.
demand elasticity.
- 9. Multiple Choice
Price discrimination is
always illegal.
a type of peak-load pricing.
not regulated in the United States.
the practice of charging different prices to different customers for the same product or service.
- 10. Multiple Choice
Which of these do antitrust laws on pricing not cover?
Collusive pricing
Dumping
Peak-load pricing
Predatory pricing
- 11. Multiple Choice
What is one of the element of the marketing mix that produces revenue?
Product
Price
Promotion
People
- 12. Multiple Choice
Pricing decisions are
clearly complex and difficult
complex
easy
merely complex and difficult
- 13. Multiple Choice
These are the things needed to consider by the company except?
The product's stage in the life cycle.
Importance in the company's portfolio
Market's quantity sensitivity
Behavior of costs with volume.
- 14. Multiple Choice
What most consumer would pay?
Reservation price
Lower - Bound Price
Upper - Bound Price
Cheap
- 15. Multiple Choice
In business, a company in the same industry or a similar industry which offers a similar product or service is called?
Coordinators
Business Partners
Management
Competitor
- 16. Multiple Choice
What is the main challenge for market leaders and firms trying to build a market share?
aggressive price cutting
salary increase
adding manpower
creating a different strategy
- 17. Multiple Choice
Three possible responses to low cost competitors are, except:
further differentiate the products and services
introduce a low-cost venture
higher the standards
reinvent a low cost player
- 18. Multiple Choice
This includes the desired payback period for R/D cost and investments.
Customer
Competition
Pricing
Company
- 19. Multiple Choice
Consumer Psychology and Pricing encompasses the following except;
Consumer Strategy
Reference Prices
Price Cues
Price-quality Inferences
- 20. Multiple Choice
It is a short-run objective and firm must learn how to add value or face extinction.
Maximum Current Profit
Survival
Maximum Market Share
Skimming
- 21. Multiple Choice
It sums the reactions of many individuals who have different price sensitivities.
Price Strategy
Price Experiments
Price Sensitivity
Price Elasticity
- 22. Multiple Choice
What is used by manufacturers to estimate the real profitability of dealing with different retailers?
Activity - based Cost Accounting
Target Costing
Accumulated Production
Variable Cost
- 23. Multiple Choice
Companies must deliver the value promised by their value proposition, and the customer must perceive this value.
Target Costing
Accumulated Depreciation
Accumulated Production
Perceived - Value Pricing
- 24. Multiple Choice
Many brands strive to be "affordable luxuries" or products or services characterized by high levels of perceived quality, taste and status with a price just high enough not to be out of consumer's reach.
Product Leadership
Quality Leadership
Product - Quality Leadership
Quality - Product Leadership
- 25. Multiple Choice
Companies believe that a higher sale volume will lead to lower unit costs and higher long - run profit. They set the lowest price, assuming the market is price sensitive.
Maximum Market - Share
Minimum Market - Share
Market - Share
Maximum Customer - Share
- 26. Multiple Choice
Companies win loyal customers by charging a fairly low price for a high quantity offering
Typical Price
Value Pricing
Reference Price
Expected Price
- 27. Multiple Choice
Considering an observed price, consumer often compare it to an internal reference price or an external frame of reference
Competitor Price
Fair Price
Reference Price
Typical Price
- 28. Multiple ChoiceThe quantity of peanuts supplied increased from 40 tons/week to 60 tons/week when the price of peanuts increased from $4/ton to $5/ton. The price elasticity of supply for peanuts over this price range is:ElasticInelasticUnit ElasticPerfectly Inelastic
- 29. Multiple ChoiceA city's transit authority increases the price of subway and bus tickets from $1.25 to $1.50. If the demand for these tickets is price inelastic, 1) the # of people riding buses & subways AND 2) the city's revenues will change in which way (respectively)?1) Increase; 2)Increase1) Decrease; 2) Increase1) Decrease; 2) Decrease1) No Change; 2) Increase
- 30. Multiple ChoiceThe market for goldfish is competitive. From year 1 to year 2, both the price and the quantity of goldfish increase. This is most likely caused by:An increase in the supplyA decrease in the demandAn increase in the demandA decrease in both the demand & the supply
- 31. Multiple ChoiceIf a 10 percent increase in the price of a good leads to a 25 percent decrease in the quantity demanded of a good, demand is:Relatively inelasticRelatively elasticPerfectly elasticPerfectly inelastic
- 32. Multiple ChoiceFor an inferior good, an increase in consumer income will cause:The demand curve to shift leftThe demand curve to shift rightThe supply curve to shift leftThe supply curve to shift right
- 33. Multiple ChoiceIn which of the following cases would a firm's total revenue increase?Price increases and demand is elasticPrice decreases and supply is inelasticPrice decreases and demand is inelasticPrice decreases and demand is elastic
- 34. Multiple ChoiceBased on the demand curve for good X, it can be determined that good x has:Many substitutesA few substitutesNo substitutesOnly one substitute
- 35. Multiple Choice
A product is likely to have a price elasticity of demand that exceeds 1 when:
Its price falls
It is a necessity
It has close substitutes
Consumers are not very responsive to changes in price
- 36. Multiple ChoiceIf the price elasticity of demand for a product equals 1, as its price rises the:Quantity demanded does not change.Total revenue increases.Total revenue does not changeQuantity demanded increases.
- 37. Multiple ChoiceA 10 percent decrease in the price of a Pepsi decreases the demand for a Coca-Cola by 50 percent. The cross elasticity of demand between a Pepsi and Coca-Cola is:500.20105
- 38. Multiple ChoiceA 10 percent decrease in income decreases the quantity demanded of scented candles by 3 percent. The income elasticity of demand for scented candles is:0.3-0.33-3.3
- 39. Multiple ChoiceIf a 1 percent decrease in the price of a pound of oranges results in a smaller percentage decrease in the quantity supplied, then:Supply is inelasticDemand is inelasticSupply is elasticDemand is elastic
- 40. Multiple ChoiceThe price elasticity of demand measures how muchquantity demanded responds to a change in price.quantity demanded responds to a change in income.price responds to a change in demand.demand responds to a change in supply.
- 41. Multiple ChoiceSuppose there is a 6 percent increase in the price of good X and a resulting 6 percent decrease in the quantity of X demanded. Price elasticity of demand for X is01636
- 42. Multiple ChoiceFor a particular good, a 12 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?There are many substitutes for this good.The good is a necessity.The market for the good is narrowly defined.
The relevant time horizon is long. - 43. Multiple ChoiceA key determinant of the price elasticity of supply isthe ability of sellers to change the price of the good they produce.the ability of sellers to change the amount of the good they produce.how responsive buyers are to changes in sellers' prices.the slope of the demand curve.
- 44. Multiple ChoiceIf the price elasticity of supply is 0.2, and a price increase led to a 3% increase in quantity supplied, then the price increase is about0.07%.0.60%6%15%
- 45. Multiple ChoiceHolding all other factors constant and using the midpoint method, if a candy manufacturer increases production by 20 percent when the market price of candy increases from $0.50 to $0.60, then supply isinelastic, since the price elasticity of supply is equal to .91.inelastic, since the price elasticity of supply is equal to 1.1.elastic, since the price elasticity of supply is equal to 0.91.elastic, since the price elasticity of supply is equal to 1.1.
- 46. Multiple ChoiceIncome elasticity of demand measures howthe quantity demanded changes as consumer income changes.consumer purchasing power is affected by a change in the price of a good.the price of a good is affected when there is a change in consumer income.many units of a good a consumer can buy given a certain income level.
- 47. Multiple ChoiceWhich of the following statements about the consumers’ responses to rising gasoline prices is correct?About 10 percent of the long-run reduction in quantity demanded arises because people drive less and about 90 percent arises because they switch to more fuel-efficient cars.About 90 percent of the long-run reduction in quantity demanded arises because people drive less and about 10 percent arises because they switch to more fuel-efficient cars.About half of the long-run reduction in quantity demanded arises because people drive less and about half arises because they switch to more fuel-efficient cars.Because gasoline is a necessity, consumers do not decrease their quantity demanded in either the short run or the long run.
- 48. Multiple ChoiceAn advance in farm technology that results in an increased market supply isgood for farmers because it raises prices for their products but bad for consumers because it raises prices consumers pay for food.bad for farmers because total revenue will fall but good for consumers because prices for food will fall.good for farmers because it raises prices for their products and also good for consumers because more output is available for consumption.bad for farmers because total revenue will fall and bad for consumers because farmers will raise the price of food to increase their total revenue.
- 49. Multiple Choice
If P = $10 for Tiny Tee-shirts, Q = 20, but if P = $5, Q = 25. The price elasticity of demand for Tiny Tee-shirts is:
3.0.
1/3
1/2
21
- 50. Multiple Choice
If the price of Kellogg's Corn Flakes goes up from $1.89 to $2.05 and quantity demanded changes from 250 to 210, then the price elasticity of demand would be:
0.47
0.02
250
2.14
- 51. Multiple Choice
Alyssa’s Floral Shoppe dropped its prices for a dozen roses from $45 to $35 this year. Because of this decrease in price, the quantity sold increased from 1000 to 1500. The price elasticity of demand for Alyssa’s roses is:
1.00.
1.6.
0.625.
2.25
- 52. Multiple Choice
The income elasticity of demand is a measure of the:
relative responsiveness of quantity demanded to changes in income.
absolute change in demand yielded by an absolute change in income.
slope of the income-consumption curve.
negative slope of a market demand curve.
- 53. Multiple Choice
If the income elasticity of market demand is negative, most consumers view the good as:
a luxury good
having many imperfect substitutes.
an inferior good.
) a normal good.
- 54. Multiple Choice
If average income rises from $18,000 per year to $22,000 per year and annual gasoline consumption per household rises from 1000 to 1500 gallons, the income elasticity of demand for gas is:
in the inferior range
0.5
1
2
- 55. Multiple Choice
If two goods have negative price cross‑elasticities of demand, the goods are:
inferior goods.
luxury goods.
complementary goods:
substitute goods.
- 56. Multiple Choice
If a price hike from $15 to $20 for DVD disks causes sales of DVD players to fall from 100 to 50 units, the coefficient of cross-elasticity of demand between these goods is roughly:
‑1/10.
‑10.
- 7/3.
-3/7.
- 57. Multiple Choice
A 2% price cut for doodads causes gizmo sales to fall by 3%. The price cross elasticity of demand between these goods is roughly _____ and these goods are _____.
‑2/3, substitutes.
1.5, substitutes.
2/3, complements.
‑1.5, complements.
- 58. Multiple Choice
If Ford raises pickup truck prices 20% and Chevy pickup sales rise 12%, then these goods are _____ and their cross elasticity coefficient is roughly _____.
complements; ‑0.6.
substitutes; 0.6.
substitutes; ‑1.67.
inferior; 1.67.
- 59. Multiple Choice
The percentage change in quantity supplied divided by the percentage change in price is a rough measure of a good's:
unitary margin.
price elasticity of supply.
exclusivity ratio.
price elasticity of demand.
- 60. Multiple Choice
If a change in the supply of a good results in a percentage change in quantity demanded that exceeds in absolute value the percentage change in price, then demand is relatively:
price elastic.
inferior.
normal.
price inelastic
- 61. Multiple Choice
Which of the following suggest that supply is most price elastic?
A pay hike from $400 to $800 monthly raises military enlistees from 12,000 to 28,000 monthly
A 20% increase in goat milk production follows a 40% rise in the price of cow milk.
Per bushel wheat prices fall from $8 to $5; production drops from 460 to 340 million tons.
Income rises from $2,500 to $3,500 and auto sales rise from 6 to 18 million annually.
- 62. Multiple Choice
Price elasticities of demand tend to
fall as higher prices are charged.
rise as higher prices are charged.
almost always be constant.
not be related to the length of time.
- 63. Multiple ChoiceWhen replacing a certain item with with a less costly item is an example ofthe substitution effectthe income effectdemand elasticitycomplements
- 64. Multiple ChoiceBuying one ice-cream instead of two at lunch describes what conceptmarginal utilitydiminishing marginal utilitydemandconsumerism
- 65. Multiple Choicewhen consumers have a need for a product that is urgentthe demand curve is inelasticthe demand curve is elasticthe demand curve is complementarythe demand curve is unit demand
- 66. Multiple ChoiceArea of economics that deals with behaviors and decision making of unitsMicroeconomicsdemand curvedemandmarginal utility
- 67. Multiple ChoiceThe extra usefulness of satisfaction a person gets from acquiring of using one or more unit of a productelasticitymarginal utilitysubstitutesincome effect
- 68. Multiple ChoiceProducts that tend to be used togethercomplementssubstitutesgoodsneeds
- 69. Multiple ChoiceAn increase or a decrease in quantity demanded due to a change in the relative price of the replacement productSubstituteSubstitute effectmarginal utilityincome effect
- 70. Multiple ChoiceChange in quantity demanded due to a change in price that alters a consumers real incomeelasticityinelasticincome effecttotal expenditures
- 71. Multiple ChoiceThe formula for calculating elasticity of demand is:The % change in price over the % change in quantity demandedThe % change in quantity demanded over the % change in priceThe change in price over the change in quantity demanedThe change in quantity demanded over the change in price
- 72. Multiple ChoiceIf the price on a product goes up the quantity demanded will go down. This follows the economic theory of:Law of Demandelasticityincome effectNone of the above
- 73. Multiple Choicewhich of the following is not a determinant of demand elasticity?availability of substitutesshare of consumer's budget spend on goodduration of adjustment periodgovernment spending
- 74. Multiple ChoiceConsuming more of one good because of a change in price of another good is known as theincome effectsubstitution effectelasticity effectdemand effect
- 75. Multiple Choice
What does it mean?
Ed = 0
Perfectly inelastic demand
Inelastic demand
Unitarily elastic demand
Elastic demand
Perfectly elastic demand
- 76. Multiple Choice
What does it mean?
Ed = 1
Perfectly inelastic demand
Inelastic demand
Unitarily elastic demand
Elastic demand
Perfectly elastic demand
- 77. Multiple Choice
What does it mean?
Ed = ∞
Perfectly inelastic demand
Inelastic demand
Unitarily elastic demand
Elastic demand
Perfectly elastic demand
- 78. Multiple Choice
What does it mean?
Ed > 1
Perfectly inelastic demand
Inelastic demand
Unitarily elastic demand
Elastic demand
Perfectly elastic demand
- 79. Multiple Choice
What does it mean?
Ed < 1
Perfectly inelastic demand
Inelastic demand
Unitarily elastic demand
Elastic demand
Perfectly elastic demand
- 80. Multiple Choice
What does it mean?
% change in Qd = % change in P
Perfectly inelastic demand
Inelastic demand
Unitarily elastic demand
Elastic demand
Perfectly elastic demand
- 81. Multiple Choice
Why does demand generally become more elastic over time?
People don't change their shopping behavior over time.
Few substitutes become available.
People buy more products over time.
People have time to find substitutes and change behaviors.
- 82. Multiple Choice
Price elasticity of supply is the responsiveness of
demand to a change in price.
price to a change in supply.
quantity supplied to a change in price.
price to a change in supply.
- 83. Multiple Choice
Factory owner Susan has calculated that her PES is 3. This number means that,
if price were to rise by 2% Susan would supply 6% more products.
If price were to rise by 2% Susan would supply 3% more products.
the percentage change in price is three times the percentage change in quantity.
in the PES formula, the top number is smaller than the bottom number.
- 84. Multiple Choice
If storage of a good is cheap and readily available, supply is likely to be
relatively elastic.
relatively inelastic.
perfectly inelastic.
perfectly elastic.
- 85. Multiple ChoiceSuppose that elasticity of demand of socks is 0.7. If the price of socks is reduced by 10%, how will sales be effected?sales will grow by more than 10%Sales will grow by 10%Sales will grow by less than 10%Sales will decrease by 10%
- 86. Multiple ChoiceThe formula for calculating elasticity of demand is:The % change in price over the % change in quantity demandedThe % change in quantity demanded over the % change in priceThe change in price over the change in quantity demanedThe change in quantity demanded over the change in price
- 87. Multiple Choice
Water has seen an increase in demand 8% this summer, while the price has decreased 12%
1.5 inelastic
1.5 elastic
.67 inelastic
.67 elastic
- 88. Multiple Choice
Wheat has seen a decrease in demand of 5%, while the price has increased 7%
1.4 inelastic
1.4 elastic
.71 inelastic
.71 elastic
- 89. Multiple Choice
Elastisitas harga permintaan (Ed) mengukur perubahan kuantitas barang yang diminta diminta terhadap-----?
kuantitas baru
penawaran
persen perubahan harga
persen perubahan pendapatan
- 90. Multiple Choice
Elastisitas harga permintaan elastis mempunyai kurva permintaan yang?
Landai
Tinggi
Curam
Lurus
- 91. Multiple Choice
Hitung nilai elastisitas permintaan buah rambutan apabila harga buah rambutan meningkat dari Rp. 4.00 menjadi Rp. 5.00 dan kuantitas barang yang diminta turun dari 50 kg kepada 45 kg.
0.4
2.6
-10
25
- 92. Multiple Choice
Tanda negatif pada koefisien elastisitas harga permintaan menunjukkan hubungan --------------------------------------------antara harga dengan kuantitas barang yang diminta
Positif
Songsang
Negatif
Sama
- 93. Multiple Choice
Hitung nilai elastisitas persen perubahan jumlah barang yang diminta berupa beras apabila harga beras meningkat dari Rp. 5.00 menjadi Rp. 6.00 dan kuantitas barang yang diminta turun dari 20 kg menjadi 18 kg.
5
-30%
25
-10%
- 94. Multiple Choice
Seorang pedagang buah segar membeli 200 buah belimbing dengan harga keseluruhan Rp800.000,00. Belimbing itu kemudian dijual seharga Rp25.000,00 setiap 5 buah dan habis terjual. Pernyataan berikut yang benar adalah ....
Pedagang mengalami rugi Rp200.000,00
Pedagang mengalami untung Rp1.000.000,00
Pedagang mengalami untung Rp200.000,00
Pedagang mengalami rugi Rp1.000.000,00
- 95. Multiple ChoiceHow does supply and demand affect pricing?Supply and demand determine how much of a good a consumer will. purchaseSupply and demand determine how a good will be remembered by others.Supply and demand determine if a consumer seeks a bargain.
- 96. Multiple Choice
Term for a item that is intentionally priced below cost to draw people into the store
Loser Item
Sale
Discount Item
Loss Leader
- 97. Multiple Choice
The 3rd step in Setting Prices is....
Determine Pricing Objectives
Study the Competition
Estimate Demand
Set Price
- 98. Multiple Choice
What is the Pricing strategy being used when people think they are getting a bargain because price ends in an odd number?
Multiple Pricing
Odd-Even Pricing
Bundle Pricing
Mark Up Mark Up
- 99. Multiple Choice
Which of the following is NOT an item in our pricing strategies grid?
Introductory Pricing
Skimming
Premium
Economy
- 100. Multiple Choice
Companies A, B, and C sell similar products. Together, they recently decided to sell their products for the same price. The businesses are engaging in which unethical activity?
Bait and switch
Price-fixing
Loss-leader pricing
Gray Markets
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