Chapter 8 Pricing strategy

Effective ________ pricing involves understanding how much value consumers place on the benefits they receive from the product and setting a price that captures that value.

• A) competition-oriented

• B) cost-based

• C) time-based

• D) customer-oriented

A restaurant wants to use value-based pricing. It knows the costs of the ingredients in the food. It must also factor in ________ in determining customer satisfaction and value.

• A) wages of employees

• B) costs of utilities of the restaurant

• C) atmosphere and décor of the restaurant

• D) cost of raw material

Costs that change with the level of production are referred to as ________.

• A) fixed costs

• B) variable costs

• C) target costs

• D) total costs

Under ________, the market consists of many buyers and sellers trading in a uniform commodity.

• A) pure competition

• B) monopolistic competition

• C) oligopolistic competition

• D) a pure monopoly

In Viña del Mar, Chile, a large number of shops specialize in selling the same quality of seafood products along the beach frequented by tourists. No individual shop dares charge more than the going price without fearing loss of business to other shops. This exemplifies ________.

• A) pure competition

• B) monopolistic competition

• C) oligopolistic competition

• D) pure monopoly

The movie industry in a country is controlled by six large studios that receive 90 percent of the annual revenues from movies. This is an example of a(n) ________.

• A) pure competition

• B) monopolistic competition

• C) oligopolistic competition

• D) pure monopoly

________ refers to a measure of the sensitivity of demand to changes in price.

• A) Price elasticity

• B) A demand curve

• C) Price-value equation

• D) Marginal utility

Colgate

company plans to introduce four toothpaste models over the next year. These

models range from basic users at $2 per unit, to more sensitive users at $4 per

unit. The more features a model has, the more expensive it is. What pricing

strategy is Colgate using for its range of toothpaste products?

• A) product line pricing

• B) product bundle pricing

• C) captive product pricing

• D) by-product pricing

Which of the following is true of optional-product pricing?

• A) It involves capitalizing on low value by-products.

• B) It involves pricing products that can be added to the base product.

• C) It is used to price a company's main product.

• D) It involves setting geographically specific prices.

Multiprint, a printer manufacturing firm, sells ink cartridges for each of its specific models. Only Multiprint cartridges are compatible with Multiprint printers, and no two models share the same specifications. What type of pricing does Multiprint use?

• A) product line pricing

• B) captive product pricing

• C) optional product pricing

• D) by-product pricing