mktg 3650 EXAM 3 2025 COMPLETE
QUESTIONS AND CORRECT
DETAILED ANSWERS WITH
RATIONALES
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. - Answer- true
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: - Answer- inverse demand
Price elasticity of demand refers to the: - Answer- Responsiveness of quantity
demanded to price changes.
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. - Answer- Variable Cost
is the ratio of perceived benefits to price and any other incurred costs. - Answer- value
A manufacturer could try to defend itself against charges of price discrimination under
the Robinson-Patman Act by claiming that: - Answer- All of the above are possible
defenses against price discrimination charges.
Which method for estimating demand curves is least appropriate for the marketer of a
new product. - Answer- Using historical data
When a seller attempts to employ promotion to shift the demand curve for its product to
the right, such efforts represent: - Answer- non price competition
Which of the following is least likely to cause problems when employing historical data
to estimate demands curves? - Answer- The seller introduced several new products that
were considered to be category extensions during the time in question.
The business license, rental fees, and insurance are all examples of: - Answer- Fixed
Costs
When production stops (i.e. no units produced), ______________ becomes zero. -
Answer- variable cost of production
, Assume that research suggests that your target market consists of approximately
500,000 persons. You anticipate that each buyer will purchase an average of 1.5 units
of the product. What level of demand can you expect at the $4.00 price? (round to the
nearest unit). - Answer- 450,000
Which of the following pricing strategies would you suggest to a retailer that wishes to
encourage price-sensitive shoppers to postpone their purchases for those products the
retailer intends to place on sale until the planned time of the sale: - Answer- Systematic
(periodic) discounting
A tire retailer is advertising a very low price on a popular size tire. When a customer
comes into the store, the clerk says the low-priced item is sold out, and tries to convince
the customer to buy the top-of-the-line model - Answer- Bait pricing
A retail firm that uses leader pricing is: - Answer- cutting the regular price on a few items
with the hope of attracting customers.
A profit-oriented manufacturer of a consumer durable product faces a demand curve
that is upward sloping to the right until extremely high prices are reached. For these
latter prices, the demand curve tips over and is downward sloping. - Answer- prestige
pricing
The Wine Cabinet, a store that features fine wines from all over the world, consistently
prices The Complete Wine Course at $10.99. It sells this book at a price far below its
regular retail price of $25.95 in order to attract wine shoppers - Answer- leader pricing
For which of the following products would a retailer be LEAST likely to use odd pricing?
- Answer- a designer evening dress
Which of the following is least likely to be a condition necessary for employing a
skimming pricing strategy? - Answer- A large, highly price-elastic market exists for the
product
A manufacturer has set the initial price of its product below the product's AVC. The
manufacturer assumes that the low price will be attractive to enough consumers so that
market share can be acquired very rapidly. - Answer- experience curve effects
Alberton's supermarket prominently displays the prices of its brands side-by-side with
prices you may pay at competing grocery stores for the same brand. - Answer-
psychological pricing and reference pricing
A manufacturer of a very labor-intensive product wishes to employ the 'experience
curve' to predict the AVC associated with various levels of cumulative production
volume. Based on the first lot of 1,000 units, AVC are $12.50 per unit. - Answer- AVC
declines by 10% with each doubling of cumulative output
QUESTIONS AND CORRECT
DETAILED ANSWERS WITH
RATIONALES
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. - Answer- true
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: - Answer- inverse demand
Price elasticity of demand refers to the: - Answer- Responsiveness of quantity
demanded to price changes.
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. - Answer- Variable Cost
is the ratio of perceived benefits to price and any other incurred costs. - Answer- value
A manufacturer could try to defend itself against charges of price discrimination under
the Robinson-Patman Act by claiming that: - Answer- All of the above are possible
defenses against price discrimination charges.
Which method for estimating demand curves is least appropriate for the marketer of a
new product. - Answer- Using historical data
When a seller attempts to employ promotion to shift the demand curve for its product to
the right, such efforts represent: - Answer- non price competition
Which of the following is least likely to cause problems when employing historical data
to estimate demands curves? - Answer- The seller introduced several new products that
were considered to be category extensions during the time in question.
The business license, rental fees, and insurance are all examples of: - Answer- Fixed
Costs
When production stops (i.e. no units produced), ______________ becomes zero. -
Answer- variable cost of production
, Assume that research suggests that your target market consists of approximately
500,000 persons. You anticipate that each buyer will purchase an average of 1.5 units
of the product. What level of demand can you expect at the $4.00 price? (round to the
nearest unit). - Answer- 450,000
Which of the following pricing strategies would you suggest to a retailer that wishes to
encourage price-sensitive shoppers to postpone their purchases for those products the
retailer intends to place on sale until the planned time of the sale: - Answer- Systematic
(periodic) discounting
A tire retailer is advertising a very low price on a popular size tire. When a customer
comes into the store, the clerk says the low-priced item is sold out, and tries to convince
the customer to buy the top-of-the-line model - Answer- Bait pricing
A retail firm that uses leader pricing is: - Answer- cutting the regular price on a few items
with the hope of attracting customers.
A profit-oriented manufacturer of a consumer durable product faces a demand curve
that is upward sloping to the right until extremely high prices are reached. For these
latter prices, the demand curve tips over and is downward sloping. - Answer- prestige
pricing
The Wine Cabinet, a store that features fine wines from all over the world, consistently
prices The Complete Wine Course at $10.99. It sells this book at a price far below its
regular retail price of $25.95 in order to attract wine shoppers - Answer- leader pricing
For which of the following products would a retailer be LEAST likely to use odd pricing?
- Answer- a designer evening dress
Which of the following is least likely to be a condition necessary for employing a
skimming pricing strategy? - Answer- A large, highly price-elastic market exists for the
product
A manufacturer has set the initial price of its product below the product's AVC. The
manufacturer assumes that the low price will be attractive to enough consumers so that
market share can be acquired very rapidly. - Answer- experience curve effects
Alberton's supermarket prominently displays the prices of its brands side-by-side with
prices you may pay at competing grocery stores for the same brand. - Answer-
psychological pricing and reference pricing
A manufacturer of a very labor-intensive product wishes to employ the 'experience
curve' to predict the AVC associated with various levels of cumulative production
volume. Based on the first lot of 1,000 units, AVC are $12.50 per unit. - Answer- AVC
declines by 10% with each doubling of cumulative output
