MARKETING 291 FINAL PRACTICE
PAPER 2026 COMPLETE SOLUTIONS
1. Target Profit Pricing.
Answer: when a firm sets an annual target of a specific dollar volume of
profit
2. Target Return on Sales.
Answer: set prices that will give them a profit that is specified as a %
3. Target Return on Investment.
Answer: set prices to achieve an ROI such as a % that is mandated by
the BOD
4. Types of Competition Oriented Pricing.
Answer: customary pricing, above/at/below market pricing, loss leader
pricing
5. Customary pricing.
Answer: used when a standardized channel of distribution or other
competitive factors dictate the price (e.g., vending machines candy bars)
6. Above, at, or below market pricing.
Answer: when an organization purposely sells a product above, below,
or at the market price (e.g., Rolex above)
7. Loss leader pricing.
Answer: when special promotion retail stores deliberately sell a product
below its customary price to attract attention
,8. Three factors that influence demand.
Answer: consumer tastes, price and availability of similar products,
consumer income
9. Shifts in demand.
Answer: when advertising causes more people to want a product and
price stays the same
10.Price elasticity of demand.
Answer: % change in quantity demanded relative to % change in price
11.Elastic demand.
Answer: when a 1% decrease in price produces more than a 1%
increase in quantity demanded
12.Inelastic demand.
Answer: when a 1% decrease in price produces less than a 1% increase
in quantity demanded
13.Break-even analysis.
Answer: a technique that analyzes total revenue and total cost to
determine profitability at various levels of output
14.Break-even point.
Answer: when total revenue and total cost are equal
15.Break-even point formula.
Answer: Fixed cost / (unit price – unit variable cost)
16.Fixed cost.
Answer: the sum of expenses of the firm that does not change when
quantity of products sold changes
, 17.Variable costs.
Answer: the sum of costs that change directly with the quantity of a
product that is produced and sold
18.Pricing objectives.
Answer: profit, sales, market share, unit volume, survival, social
responsibility
19.Profit (as a pricing objective).
Answer: return on investment
20.Market share (as a pricing objective).
Answer: ratio of a firm's sales revenues to those of the industry
21.Unit volume pricing objective.
Answer: focuses on the number of units sold rather than dollar sales
22.Survival pricing objective.
Answer: setting prices low enough to cover costs and keep the firm
operating during difficult times
23.Social responsibility pricing objective.
Answer: pricing that considers the broader impact on society and
stakeholders
24.Price skimming.
Answer: setting a high initial price to maximize revenue from early
adopters
25.Penetration pricing.
Answer: setting a low initial price to gain market share quickly
PAPER 2026 COMPLETE SOLUTIONS
1. Target Profit Pricing.
Answer: when a firm sets an annual target of a specific dollar volume of
profit
2. Target Return on Sales.
Answer: set prices that will give them a profit that is specified as a %
3. Target Return on Investment.
Answer: set prices to achieve an ROI such as a % that is mandated by
the BOD
4. Types of Competition Oriented Pricing.
Answer: customary pricing, above/at/below market pricing, loss leader
pricing
5. Customary pricing.
Answer: used when a standardized channel of distribution or other
competitive factors dictate the price (e.g., vending machines candy bars)
6. Above, at, or below market pricing.
Answer: when an organization purposely sells a product above, below,
or at the market price (e.g., Rolex above)
7. Loss leader pricing.
Answer: when special promotion retail stores deliberately sell a product
below its customary price to attract attention
,8. Three factors that influence demand.
Answer: consumer tastes, price and availability of similar products,
consumer income
9. Shifts in demand.
Answer: when advertising causes more people to want a product and
price stays the same
10.Price elasticity of demand.
Answer: % change in quantity demanded relative to % change in price
11.Elastic demand.
Answer: when a 1% decrease in price produces more than a 1%
increase in quantity demanded
12.Inelastic demand.
Answer: when a 1% decrease in price produces less than a 1% increase
in quantity demanded
13.Break-even analysis.
Answer: a technique that analyzes total revenue and total cost to
determine profitability at various levels of output
14.Break-even point.
Answer: when total revenue and total cost are equal
15.Break-even point formula.
Answer: Fixed cost / (unit price – unit variable cost)
16.Fixed cost.
Answer: the sum of expenses of the firm that does not change when
quantity of products sold changes
, 17.Variable costs.
Answer: the sum of costs that change directly with the quantity of a
product that is produced and sold
18.Pricing objectives.
Answer: profit, sales, market share, unit volume, survival, social
responsibility
19.Profit (as a pricing objective).
Answer: return on investment
20.Market share (as a pricing objective).
Answer: ratio of a firm's sales revenues to those of the industry
21.Unit volume pricing objective.
Answer: focuses on the number of units sold rather than dollar sales
22.Survival pricing objective.
Answer: setting prices low enough to cover costs and keep the firm
operating during difficult times
23.Social responsibility pricing objective.
Answer: pricing that considers the broader impact on society and
stakeholders
24.Price skimming.
Answer: setting a high initial price to maximize revenue from early
adopters
25.Penetration pricing.
Answer: setting a low initial price to gain market share quickly
