MGMT 3850 CHAPTER 10
HOMEWORK QUESTION AND
ANSWER
Essentials of Entrepreneurship & Small Business Mgmt., 7e (Scarborough)
Chapter 10 Pricing Strategies
1) Setting prices for products and services requires entrepreneurs to balance a multitude of
complex forces as entrepreneurs determine prices for their goods and services that will draw
customers and:
A) position prices lower than all competitors.
B) produce a profit.
C) effectively compete with online alternatives.
D) have high volume/high margin sales.
Answer: B
Diff: 2 Page Ref: 358
AACSB: Analytic Skills
Learning Obj.: 1
2) Which of the following statements about price is true?
A) Price measures what the customer must exchange to obtain goods and services in the
marketplace.
B) Target market, business image, and price are closely related.
C) For most goods and services, there is an acceptable price range and not a single "ideal price."
D) All of the above
Answer: D
Diff: 2 Page Ref: 358
AACSB: Analytic Skills
Learning Obj.: 1
3) A common pricing mistake entrepreneurs make is lowering prices because they fail to
recognize the:
A) extra value, convenience, service, and quality they offer their customers.
B) advantages they have due to their lower cost structure.
C) complexities that larger competitors have to face.
D) driving need that all customers have to find the lowest price possible.
Answer: A
Diff: 2 Page Ref: 358-359
AACSB: Analytic Skills
Learning Obj.: 1
4) The top business challenge that drives pricing decisions is the:
A) increased price transparency.
B) increased price sensitivity of customers.
1
,C) need to protect the brand's image.
D) increased pricing aggressiveness from competitors.
Answer: B
Diff: 2 Page Ref: 358, Figure 10.1
AACSB: Analytic Skills
Learning Obj.: 1
5) ________ frequently convey the idea of quality, prestige, and uniqueness to customers.
A) Effective packaging
B) Low prices
C) High prices
D) High profile promotions
Answer: C
Diff: 2 Page Ref: 360-361
AACSB: Communication
Learning Obj.: 1
6) A key ingredient to setting prices properly is to understand a company's:
A) cost structure.
B) most aggressive price competitor.
C) target market.
D) profit expectations.
Answer: C
Diff: 3 Page Ref: 359-360
AACSB: Analytic Skills
Learning Obj.: 1
7) An entrepreneurial company can differentiate itself by creating a distinctive image in
customers' minds or by offering:
A) superior service and quality.
B) exceptional design and convenience.
C) speed and performance.
D) All the above provide the opportunity for differentiation.
Answer: D
Diff: 3 Page Ref: 360-361
AACSB: Analytic Skills
Learning Obj.: 1
8) In general, entrepreneurs should ________ head-to-head price competition with firms that can
more easily achieve lower prices through lower cost structures.
A) avoid
B) take on
C) meet
D) exit the market when faced with
Answer: A
Diff: 2 Page Ref: 361-362
AACSB: Analytic Skills
2
, Learning Obj.: 1
3
HOMEWORK QUESTION AND
ANSWER
Essentials of Entrepreneurship & Small Business Mgmt., 7e (Scarborough)
Chapter 10 Pricing Strategies
1) Setting prices for products and services requires entrepreneurs to balance a multitude of
complex forces as entrepreneurs determine prices for their goods and services that will draw
customers and:
A) position prices lower than all competitors.
B) produce a profit.
C) effectively compete with online alternatives.
D) have high volume/high margin sales.
Answer: B
Diff: 2 Page Ref: 358
AACSB: Analytic Skills
Learning Obj.: 1
2) Which of the following statements about price is true?
A) Price measures what the customer must exchange to obtain goods and services in the
marketplace.
B) Target market, business image, and price are closely related.
C) For most goods and services, there is an acceptable price range and not a single "ideal price."
D) All of the above
Answer: D
Diff: 2 Page Ref: 358
AACSB: Analytic Skills
Learning Obj.: 1
3) A common pricing mistake entrepreneurs make is lowering prices because they fail to
recognize the:
A) extra value, convenience, service, and quality they offer their customers.
B) advantages they have due to their lower cost structure.
C) complexities that larger competitors have to face.
D) driving need that all customers have to find the lowest price possible.
Answer: A
Diff: 2 Page Ref: 358-359
AACSB: Analytic Skills
Learning Obj.: 1
4) The top business challenge that drives pricing decisions is the:
A) increased price transparency.
B) increased price sensitivity of customers.
1
,C) need to protect the brand's image.
D) increased pricing aggressiveness from competitors.
Answer: B
Diff: 2 Page Ref: 358, Figure 10.1
AACSB: Analytic Skills
Learning Obj.: 1
5) ________ frequently convey the idea of quality, prestige, and uniqueness to customers.
A) Effective packaging
B) Low prices
C) High prices
D) High profile promotions
Answer: C
Diff: 2 Page Ref: 360-361
AACSB: Communication
Learning Obj.: 1
6) A key ingredient to setting prices properly is to understand a company's:
A) cost structure.
B) most aggressive price competitor.
C) target market.
D) profit expectations.
Answer: C
Diff: 3 Page Ref: 359-360
AACSB: Analytic Skills
Learning Obj.: 1
7) An entrepreneurial company can differentiate itself by creating a distinctive image in
customers' minds or by offering:
A) superior service and quality.
B) exceptional design and convenience.
C) speed and performance.
D) All the above provide the opportunity for differentiation.
Answer: D
Diff: 3 Page Ref: 360-361
AACSB: Analytic Skills
Learning Obj.: 1
8) In general, entrepreneurs should ________ head-to-head price competition with firms that can
more easily achieve lower prices through lower cost structures.
A) avoid
B) take on
C) meet
D) exit the market when faced with
Answer: A
Diff: 2 Page Ref: 361-362
AACSB: Analytic Skills
2
, Learning Obj.: 1
3
