Alden Manufacturing produces small kitchen appliances-blenders, hand mixers, and electric skillets-under the brand name First Generation. Alden attempts to target newlyweds and first-time home buyers with this brand.
In considering that most young households have limited financial resources, Alden has attempted to engage in target costing. "In doing this," Milt Alden stated, "we have better control over keeping price right in line with customers."
Alden manufactures a three-speed blender, its top seller, and a five-speed blender. The hand mixers are manufactured in two styles-a small handheld mixer with two rotating beaters and a similar style that comes with an optional stand and attached mixing bowl. Alden's temperature-controlled skillets are manufactured in one style with three color options.
"Our product offerings are narrower," Milt Alden added, "but our line workers know each product like the back of their hands. This allows us to produce superior products while holding our prices low."
98) Milt Alden says that his line workers "know each product like the back of their hands," and that this knowledge helps the company keep its prices low. This indicates that Alden Manufacturing most likely uses which of the following strategies?
A) cost-plus pricing
B) value-added pricing
C) the experience curve
D) cost-based pricing
E) target profit pricing
Answer: C
Diff: 2 Page Ref: 297
AACSB: Reflective Thinking Skills
Skill: Application
Objective: 10-2
99) Milt Alden uses a target costing strategy. Which of the following is he most likely to do in executing this strategy?
A) base his price on competitors' prices
B) use everyday low pricing
C) use a break-even chart to determine pricing
D) start with customer-value considerations
E) start by determining the costs of a new product
Answer: D
Diff: 2 Page Ref: 300
AACSB: Reflective Thinking Skills
Skill: Application
Objective: 10-3
100) If Alden raises the price on the handheld mixer by 2 percent and quantity demanded falls by 10 percent, what is the price elasticity of demand?
A) -5
B) -8
C) -12
D) 5
E) 12
Answer: A
Diff: 3 Page Ref: 303
AACSB: Reflective Thinking Skills
Skill: Application
Objective: 10-4
101) Prices have a direct impact on a company's bottom line.
Answer: TRUE
Diff: 1 Page Ref: 290
Skill: Concept
Objective: 10-1
102) Demand and consumer value perceptions set the floor for prices.
Answer: FALSE
Diff: 2 Page Ref: 291
Skill: Concept
Objective: 10-2
103) Product costs set a floor to the price; consumer perceptions of the product's value set the ceiling.
Answer: TRUE
Diff: 2 Page Ref: 291
Skill: Concept
Objective: 10-2
104) Value-based pricing is being used when costs vary directly with the level of product.
Answer: FALSE
Diff: 3 Page Ref: 291
Skill: Concept
Objective: 10-2
105) Value-based pricing uses the company's perception of value.
Answer: FALSE
Diff: 2 Page Ref: 291
Skill: Concept
Objective: 10-2
106) Value-based pricing is the reverse of cost-based pricing.
Answer: TRUE
Diff: 2 Page Ref: 291
Skill: Concept
Objective: 10-2
107) EDLP is very similar to high-low pricing.
Answer: FALSE
Diff: 2 Page Ref: 293
Skill: Concept
Objective: 10-2
108) Overhead cost is another term for fixed cost.
Answer: TRUE
Diff: 1 Page Ref: 296
Skill: Concept
Objective: 10-2
109) Cost-based pricing relies on consumer perception of value to drive pricing.
Answer: FALSE
Diff: 2 Page Ref: 295
Skill: Concept
Objective: 10-2
110) Average unit cost increases with accumulated production experience.
Answer: FALSE
Diff: 1 Page Ref: 297
Skill: Concept
Objective: 10-2
111) An upward-sloping experience curve is beneficial for a company.
Answer: FALSE
Diff: 3 Page Ref: 297
Skill: Concept
Objective: 10-2
112) The simplest pricing method is cost-plus pricing, which involves adding a standard markup to the cost of the product.
Answer: TRUE
Diff: 1 Page Ref: 297
Skill: Concept
Objective: 10-2
113) Markup pricing is popular because prices tend to be similar and price competition is thus minimized.
Answer: TRUE
Diff: 2 Page Ref: 298
Skill: Concept
Objective: 10-2
114) Target return pricing is used when a firm tries to determine the price at which it will break even or make the profit it is seeking.
Answer: TRUE
Diff: 3 Page Ref: 298
Skill: Concept
Objective: 10-2
115) A break-even chart shows the total cost and total revenue expected at various sales volume levels.
Answer: TRUE
Diff: 2 Page Ref: 298
Skill: Concept
Objective: 10-2
116) Environmental elements are categorized as external factors that affect pricing decisions.
Answer: TRUE
Diff: 2 Page Ref: 300
Skill: Concept
Objective: 10-3
117) In a pure monopoly, the market consists of one seller.
Answer: TRUE
Diff: 2 Page Ref: 302
Skill: Concept
Objective: 10-3
118) The demand curve shows the number of units the market will buy in a given time period at different prices that might be charged. In normal cases, the higher the price, the lower the demand.
Answer: TRUE
Diff: 2 Page Ref: 302
Skill: Concept
Objective: 10-3
119) If demand changes greatly with price, we say the demand is inelastic.
Answer: FALSE
Diff: 2 Page Ref: 303
Skill: Concept
Objective: 10-3
120) Once a company cuts prices, it's difficulty to raise prices again when the economy recovers.
Answer: TRUE
Diff: 2 Page Ref: 304
Skill: Concept
Objective: 10-3
121) When faced with price competition, cutting prices is often not the best answer.
Answer: TRUE
Diff: 2 Page Ref: 290
AACSB: Reflective Thinking Skills
Skill: Application
Objective: 10-1
122) Using value-based pricing, a marketer would not design a product and marketing program before setting the price.
Answer: TRUE
Diff: 3 Page Ref: 291
AACSB: Reflective Thinking Skills
Skill: Application
Objective: 10-2
123) Monopolies charge the full price because they do not fear attracting competition or regulation.
Answer: FALSE
Diff: 2 Page Ref: 302
AACSB: Reflective Thinking Skills
Skill: Synthesis
Objective: 10-3
124) Marketers may learn a few simple rules that apply equally to all price-demand relationships.
Answer: FALSE
Diff: 2 Page Ref: 302
AACSB: Reflective Thinking Skills
Skill: Critical Thinking
Objective: 10-3
125) The more elastic the demand, the more it pays for the seller to raise the price.
Answer: FALSE
Diff: 2 Page Ref: 303
AACSB: Reflective Thinking Skills
Skill: Critical Thinking
Objective: 10-3
No comments:
Post a Comment