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Exam 11: Pricing and Credit Strategies

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Question 31

Multiple Choice

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________ is a technique in which a small firm marks down the price of a popular item below its normal price in an effort to increase customer traffic and to boost sales of other items.

A) Odd pricing
B) Leader pricing
C) Price lining
D) Suggested retail pricing

E) B) and C)
F) A) and B)

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Question 32

Multiple Choice

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Even in the short run,a small business must set the price of a product at least equal to the ________ costs (per unit) ,or it must shut down.

A) fixed
B) variable
C) total
D) invariable

E) All of the above
F) None of the above

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Question 33

Multiple Choice

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________ is the average markup required on all merchandise to cover the cost of items,incidental expenses,and a profit.

Tom is working on a pricing strategy for his company's new product line.In order to determine the price ceiling for these products,Tom needs to know:

The use of credit cards increases the probability,speed,and magnitude of customer spending.

Because installment credit is so profitable for the small business,most small businesses finance themselves.

Penetration pricing is a short-term pricing strategy and achieves tremendous profit.

Most small business managers follow the manufacturer's suggested retail price when it is available.

When a small business practices price lining,it most commonly carries lined merchandise in sets of ________ different ranges.

Contribution margin is the portion of sales revenue left after covering fixed expenses and a profit.

Which of the following factors is vital to determining the effects of competition on the small firm's pricing policies?

The initial markup on a product is the total markup on all merchandise to cover the cost of the items and a reasonable profit.

The price that business owners set depends on the desired image they want to create for their products or services.These images are:

Define and explain the terms: price,price range,price ceiling,and price floor.Why is it important to keep these terms distinct in the entrepreneur's thinking?

Judith started her business in 1995.During the years,she sold different products she purchased from distributors and manufacturers.One day,she came up with a new product.She patented the product and got started to sell the product.What should be the objectives of her pricing strategies?

Small business owners get into trouble when determining their price floor when they:

Which price strategy is mostly used for moving stale,outdated,damaged merchandise?

Two factors are vital to studying the effects of competition on a small firm's pricing policies:

Dotty has her competitors' price information.Her most effective use of that information would be to:

In most cases,a ________ pricing strategy is used to introduce relatively low priced goods into the market where no elite segment and little opportunity for differentiation exist.