UNT MKTG 3650 THOMPSON EXAM 3
COMPLETE QUESTIONS WITH VERIFIED
ANSWERS
\.Price elasticity of demand refers to the:
1. Responsiveness of quantity demanded to price changes.
2. Range of prices for a product category offered by competing firms.
3. The effect a new competitor has on total industry sales.
4. Willingness of consumers to postpone buying a particular product during
periods of excess demand.
5. Willingness of consumers to buy a particular product during periods of excess
supply. - ANSWERS✔-Responsiveness of quantity demanded to price changes
\.When a seller attempts to employ promotion to shift the demand curve for its
product to the right, such efforts represent:
1. price competition
2. price fixing.
3. non-price competition
4. market control
,5. economic diversification - ANSWERS✔-non-price competition
\.True/False:
Assuming the law of demand holds true for a specific demand curve, high prices
are not likely to be profitable for the seller because too few units will be sold to
cover the firms total fixed costs. - ANSWERS✔-True -- when prices are high, units
demanded tend to be low when the demand curve is downward sloping. Per unit
profit margins are very high because of the high price, but enough units generally
cannot be sold to cover the firm's fixed costs i.e. to break even.
\.Humphrey Studio sells reproductions of European antiques. Last year sales were
disappointing. The studio owner decided to increase the price of each item by
about 25%. The next year there was a 20% increase in units sold. The studio
apparently experienced:
1. Profit programming.
2. Expected price effects.
3. Inverse demand.
4. The law of demand.
5. None of the above. - ANSWERS✔-Inverse demand.
\._________ is the ratio of perceived benefits to price and any other incurred
costs.
1. Supply.
,2. Target return.
3. Value.
4. Demand.
5. Utility. - ANSWERS✔-Value.
\.A manufacturer could try to defend itself against charges of price discrimination
under the Robinson-Patman Act by claiming that:
1. any price differences were to "meet competition in good faith."
2. the price differences did not injure competition.
3. the price differences were justified on the basis of cost differences.
4. the products were not of "like grade and quality."
5. All of the above are possible defenses against price discrimination charges. -
ANSWERS✔-All of the above are possible defenses against price discrimination
charges.
\.Which of the following is least likely to cause problems when employing
historical data to estimate demands curves?
1. Competitors experimented with multiple price changes during the time frame
under analysis.
2. A consumer rights advocacy group mounted a major campaign against the
company and its products during the time under analysis.
3. The seller introduced several new products that were considered to be category
extensions during the time in question.
, 4. Price controls were imposed on the industry by the Federal government during
the period in which the pricing data were collected.
5. The seller made several major changes to its promotion program during the
time in question. - ANSWERS✔-The seller introduced several new products that
were considered to be category extensions during the time in question.
\.Which method for estimating demand curves is least appropriate for the
marketer of a new product.
1. Using test market data.
2. Using managerial judgement.
3. Using buy-response data.
4. Using historical ratios - ANSWERS✔-Using historical ratios
\.Larry and Alan are college students. Last summer, to earn money for their
college tuition, they operated a snack booth at Panama City Beach, Florida for 3
months. They sold soft drinks, chips, crackers, and candy bars. A month before
they were planning to open, Larry found a location that rented for $400 a month
and a small refrigerator unit which they rented for $50 per month. Alan found
distributors for the food products as well as for the paper products that they
would need. Alan also purchased a business license for $100 and bought 3-
month's worth of liability insurance for $150. 20. The cups, straws, napkins, and
extra sales people needed to staff the stand are all examples of:
1. Fixed costs
2. Variable costs.
3. Average costs.
COMPLETE QUESTIONS WITH VERIFIED
ANSWERS
\.Price elasticity of demand refers to the:
1. Responsiveness of quantity demanded to price changes.
2. Range of prices for a product category offered by competing firms.
3. The effect a new competitor has on total industry sales.
4. Willingness of consumers to postpone buying a particular product during
periods of excess demand.
5. Willingness of consumers to buy a particular product during periods of excess
supply. - ANSWERS✔-Responsiveness of quantity demanded to price changes
\.When a seller attempts to employ promotion to shift the demand curve for its
product to the right, such efforts represent:
1. price competition
2. price fixing.
3. non-price competition
4. market control
,5. economic diversification - ANSWERS✔-non-price competition
\.True/False:
Assuming the law of demand holds true for a specific demand curve, high prices
are not likely to be profitable for the seller because too few units will be sold to
cover the firms total fixed costs. - ANSWERS✔-True -- when prices are high, units
demanded tend to be low when the demand curve is downward sloping. Per unit
profit margins are very high because of the high price, but enough units generally
cannot be sold to cover the firm's fixed costs i.e. to break even.
\.Humphrey Studio sells reproductions of European antiques. Last year sales were
disappointing. The studio owner decided to increase the price of each item by
about 25%. The next year there was a 20% increase in units sold. The studio
apparently experienced:
1. Profit programming.
2. Expected price effects.
3. Inverse demand.
4. The law of demand.
5. None of the above. - ANSWERS✔-Inverse demand.
\._________ is the ratio of perceived benefits to price and any other incurred
costs.
1. Supply.
,2. Target return.
3. Value.
4. Demand.
5. Utility. - ANSWERS✔-Value.
\.A manufacturer could try to defend itself against charges of price discrimination
under the Robinson-Patman Act by claiming that:
1. any price differences were to "meet competition in good faith."
2. the price differences did not injure competition.
3. the price differences were justified on the basis of cost differences.
4. the products were not of "like grade and quality."
5. All of the above are possible defenses against price discrimination charges. -
ANSWERS✔-All of the above are possible defenses against price discrimination
charges.
\.Which of the following is least likely to cause problems when employing
historical data to estimate demands curves?
1. Competitors experimented with multiple price changes during the time frame
under analysis.
2. A consumer rights advocacy group mounted a major campaign against the
company and its products during the time under analysis.
3. The seller introduced several new products that were considered to be category
extensions during the time in question.
, 4. Price controls were imposed on the industry by the Federal government during
the period in which the pricing data were collected.
5. The seller made several major changes to its promotion program during the
time in question. - ANSWERS✔-The seller introduced several new products that
were considered to be category extensions during the time in question.
\.Which method for estimating demand curves is least appropriate for the
marketer of a new product.
1. Using test market data.
2. Using managerial judgement.
3. Using buy-response data.
4. Using historical ratios - ANSWERS✔-Using historical ratios
\.Larry and Alan are college students. Last summer, to earn money for their
college tuition, they operated a snack booth at Panama City Beach, Florida for 3
months. They sold soft drinks, chips, crackers, and candy bars. A month before
they were planning to open, Larry found a location that rented for $400 a month
and a small refrigerator unit which they rented for $50 per month. Alan found
distributors for the food products as well as for the paper products that they
would need. Alan also purchased a business license for $100 and bought 3-
month's worth of liability insurance for $150. 20. The cups, straws, napkins, and
extra sales people needed to staff the stand are all examples of:
1. Fixed costs
2. Variable costs.
3. Average costs.
