MKT 300 ASU EATON EXAM 1 QUESTIONS AND
ANSWERS 2026
◉ Price Elasticity. Answer: Elastic - Consumers buy more or less of a
product when the price changes
Inelastic- An increase or decrease in price will not significantly affect
demand
◉ What happens to price/revenue when the demand is
elastic/inelastic. Answer: Demand is... Price goes... Revenue goes...
Elastic: ------Up ---------- Down
Elastic: ------Down ------- Up
Inelastic: ----Up ---------- Up
Inelastic: ----Down ------- Down
◉ Stages for Establishing Prices. Answer: 1. Develop pricing
objectives
2. Assess target market's evaluation of price
3. Evaluate competitors' prices
4. Select a basis for pricing
5. Select a pricing strategy
,6. Determine a specific price
◉ Stages for Establishing Prices (Step 1 and 4). Answer: Develop
Pricing Objectives
-Profit
-Status Quo: Identify price levels similar to competitor average price
-Market Share
Selecting a Basis for Pricing
-Cost: adding a specified dollar amount to the seller's costs (Markup
and Margin)
-Demand: Customers pay a higher price when demand for the
product is strong and a lower price when demand is weak (same as
flexible pricing)
-Competition
o competing products are homogeneous resulting in elastic demand
o organization is serving markets in which price is a key
consideration
-New Product (Skimming and Penetration)
◉ Flexible/variable pricing. Answer: -Off-peak cheaper prices
-Different segments pay different rates
, ◉ New Product Pricing Strategies. Answer: Market Skimming:
charging the highest possible price that buyers who desire the
product will pay
- Premium
- Overcharging
Market Penetration: Setting prices below those of competing brands
to penetrate a market and gain a significant market share quickly
- Good-value
- Economic
◉ Market Pricing. Answer: 1. Selling Price = $1,800, Cost = $600.
What is markup %?
2. Cost = $100, markup % = 75%. What is selling price?
3. Selling Price = $300, markup % = 33.3%. What is cost?
1. 66.7% (cost is 1/3, so markup% must be 2/3)
2. $400 (3/4 of the selling price is markup, ¼ is cost)
3. $200 (cost must be 2/3 of $300 selling price)
◉ Break-Even Pricing. Answer: Total Fixed Costs / (Selling price -
Variable cost)
ANSWERS 2026
◉ Price Elasticity. Answer: Elastic - Consumers buy more or less of a
product when the price changes
Inelastic- An increase or decrease in price will not significantly affect
demand
◉ What happens to price/revenue when the demand is
elastic/inelastic. Answer: Demand is... Price goes... Revenue goes...
Elastic: ------Up ---------- Down
Elastic: ------Down ------- Up
Inelastic: ----Up ---------- Up
Inelastic: ----Down ------- Down
◉ Stages for Establishing Prices. Answer: 1. Develop pricing
objectives
2. Assess target market's evaluation of price
3. Evaluate competitors' prices
4. Select a basis for pricing
5. Select a pricing strategy
,6. Determine a specific price
◉ Stages for Establishing Prices (Step 1 and 4). Answer: Develop
Pricing Objectives
-Profit
-Status Quo: Identify price levels similar to competitor average price
-Market Share
Selecting a Basis for Pricing
-Cost: adding a specified dollar amount to the seller's costs (Markup
and Margin)
-Demand: Customers pay a higher price when demand for the
product is strong and a lower price when demand is weak (same as
flexible pricing)
-Competition
o competing products are homogeneous resulting in elastic demand
o organization is serving markets in which price is a key
consideration
-New Product (Skimming and Penetration)
◉ Flexible/variable pricing. Answer: -Off-peak cheaper prices
-Different segments pay different rates
, ◉ New Product Pricing Strategies. Answer: Market Skimming:
charging the highest possible price that buyers who desire the
product will pay
- Premium
- Overcharging
Market Penetration: Setting prices below those of competing brands
to penetrate a market and gain a significant market share quickly
- Good-value
- Economic
◉ Market Pricing. Answer: 1. Selling Price = $1,800, Cost = $600.
What is markup %?
2. Cost = $100, markup % = 75%. What is selling price?
3. Selling Price = $300, markup % = 33.3%. What is cost?
1. 66.7% (cost is 1/3, so markup% must be 2/3)
2. $400 (3/4 of the selling price is markup, ¼ is cost)
3. $200 (cost must be 2/3 of $300 selling price)
◉ Break-Even Pricing. Answer: Total Fixed Costs / (Selling price -
Variable cost)
