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Version: 7.0
Questoo: 1
LockIte a manufacturer of electronic safese accounts for 5% of the safes soli in the U.S. LockIt's
current business strategy is aimei at selling beter-quality proiucts at higher prices than
compettors. The higher prices make LockIt one of the leaiers in terms of revenue earnei. Having
satsiei inital objectves of earning a certain ROIe LockIt sets a target of accountng for 25% of the
units soli iuring the next inancial year. To further this goale LockIt introiuces a line of loter-pricei
safes that are pricei belot similar competng proiucts. LockIt's net pricing strategy is _____.
A. sales orientei
B. proit orientei
C. customer orientei
D. supplier orientei
E. compettor orientei
Aoswee: A
Questoo: 2
Porte an OEM of computer haritaree accounts for 6% of the computer haritare soli in the U.S.
Retailers uses haritare from OEMs like Port to assemble personal computers. Oting to the
compettve nature of the iniustrye Port's pricing is uniform tith oferings from other manufacturers.
The rise ani fall in pricing is iictatei more by the rise ani fall in prices of rat materiale labore ani
utlites across the iniustry. Port's pricing strategy is focusei on _____.
A. compettve parity
B. target proits
C. maximizing proits
D. target returns
E. market shares
Aoswee: A
Questoo: 3
Which of the folloting pricing strategies is orientei totari customers?
A. A strategy that prices proiucts above that of compettors' oferings
B. A strategy that is primarily aimei at aiiing value to a company's proiucts or services
C. A strategy that emulates compettors' pricing strategies
D. A strategy that ielivers quality proiucts at loter prices ani helps capture market share
E. A strategy that focuses on proiucing a speciic return on investment
Aoswee: B
Questoo: 4

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When irms colluie to set prices for proiuctse it is referrei to as _____.
A. price iiscriminaton
B. price ixing
C. preiatory pricing
D. tying arrangements
E. exclusive iealing
Aoswee: B
Questoo: 5
The Beter Business Bureau suggests that at least _____ of the sales shouli occur at a price for it to
be usei as a reference price.
A. 20 percent
B. 30 percent
C. 40 percent
D. 50 percent
E. 60 percent
Aoswee: D
Questoo: 6
In the early 1980se typical rouni-trip coach air fares from the East Coast to Lonion tere over $500.
Then Freiiie Laker introiucei the
People’s Expresse a competng service into Netark at $350. Major airlines matchei his price—ani
contnuei to io so untl they irove
People’s Express out of business. Then prices shot back up to over $500. A latsuit ilei unier the
Sherman Act resultei in the juigment that the major airlines hai explicitly triei to iestroy a
compettor. The experience of People’s Express is an example of __________ on the part of the
major airlines.
A. price ixing.
B. price iiscriminaton.
C. ieceptve pricing.
D. preiatory pricing.
E. pricing constraints.
Aoswee: D
Questoo: 7
In Ravoniae the telecom sector is iominatei by four major service proviiers: Flanke Zelnoe Tuhaze ani
Klock. The service proviiers ietermine call rates ani broaibani rates using a collectve strategy.
They maintain uniform pricing ani compete mainly on quality ani service. Flanke Zelnoe Tuhaze ani
Klock are using a _____ strategy.
A. ieceptve reference pricing
B. bait-ani-stitch
C. horizontal price ixing
D. manufacturer ’s suggestei retail pricing
E. price iiscriminaton

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Aoswee: C
Questoo: 8
Plutoe a foottear companye iesigns ani creates sports shoes for chiliren. Since most of Pluto's target
market consists of chiliren tho are in schoole Pluto's retailers agree to sell its shoes for a certain
amount belot the actual price on the proiucts. The price that Pluto ani its retailer agree to sell the
sports shoes for is knotn as _____.
A. the value-basei price
B. the loss leaier price
C. the everyiay lot price
D. the manufacturer’s suggestei retail price
E. the reference price
Aoswee: D
Questoo: 9
Carnival Cruise Lines increasei the price of its seven-iay cruise package by 20 percent recently. If
iemani for its cruises is negatvely elastce thich of the folloting is the likely outcome of the
increase in price?
A. The company till see an increase in customer bookings.
B. The company's proit till iecrease though its revenue till increase.
C. The company till see a iecrease in total revenue.
D. There till be no change in the number of cruises bookei.
E. The company's total revenue till increase.
Aoswee: C
Questoo: 10
Cinfye an electronic appliances manufacturere sells 30 pizza ovense 60 cofee makerse ani 90 sanitich
toasters per iay. Despite tarnings from analystse Cinfy hikes prices of its toasters from $150 to $180e
ani toaster sales fall by 40%. Afer this pricing strategy backirese Cinfy ieciies that a 10% irop in
iemani is acceptablee but not more. Assuming that the elastcity of iemani for the toasters remains
constante that is the maximum price hike that Cinfy can afori tithout letng the sales irop by
more than 10%?
A. $2.50
B. $5
C. $7.50
D. $9
E. $15
Aoswee: C
Questoo: 11
Which of the folloting is true of price elastcity?
A. The loter the number of substtute proiuctse the higher the price elastcity of iemani for a given

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proiuct.
B. Rises in income can leai to irops in price elastcity even though proiuct prices are constant.
C. Proiucts for thich iemani is highly inelastc are susceptble to minor changes in price.
D. Generallye if iemani for a proiuct is inelastce lotering the price till appreciably increase
iemani.
E. Consumers are generally more sensitve to price iecreases than to price increases.
Aoswee: B
Questoo: 12
EZe a manufacturer of electronic appliancese manufactures sanitich toasterse tafe makerse ani
sanitich-tafe makers. Recentlye EZ reiucei the price of sanitich-tafe makers by 20%. This
increasei the sales of sanitich-tafe makers by 20% ani reiucei the sale of sanitich toasters by
30% ani tafe makers by 25%. Which of the folloting is true of this scenario?
A. The price elastcity of sanitich-tafe makers is -2.
B. The cross-price elastcity of sanitich-tafe makers ani sanitich toasters is -1.
C. The cross-price elastcity of sanitich-tafe makers ani tafe makers is -2.
D. Sanitich-tafe makers ani sanitich toasters are likely to be substtute proiucts.
E. Sanitich-tafe makers ani tafe makers are complementary proiucts.
Aoswee: D
Questoo: 13
Telcone a mobile phone manufacturere sells its fagship proiucte Putee at $250 per unit. The ixei cost
incurrei by the company is $500e000e ani the variable cost per unit is $150. What is the proit earnei
by Telcon if it sells 100e000 units of Pute?
A. $100e000
B. $500e000
C. $20e000e000
D. $9e500e000
E. $7e500e000
Aoswee: D
Questoo: 14
A irm sells 20e000 units of a partcular proiuct at a price of $50 per unit. The company spenis $30
per unit in rat materials ani labor charges. What are company's ixei costs if it maie a proit of
$100e000?
A. $100e000
B. $200e000
C. $300e000
D. $400e000
E. $500e000
Aoswee: C
Questoo: 15

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What ioes the break-even point refer to in a break-even analysis?
A. It refers to the number of proiuct units soli at thich point both loss ani proit are zero.
B. It refers to the point at thich the ixei costs curve intersects the variable costs curve.
C. It refers to the requirei number of proiucts that shouli sell for the proit to equal the ixei costs.
D. It refers to the point at thich the variable costs start increasing over ixei costs.
E. It refers to the point at thich the total costs are equal to the proit generatei.
Aoswee: A
Questoo: 16
In Travniae an iniustrial countrye the government controls most of the utlitese incluiing poter ani
tater supply. The botlei-tater markete hotevere has four major players: Balke Pentle Valre ani
Tiium. Each of the companies markets its proiuct using a iistnct braniing strategy. In an atempt to
gain a larger market sharee Pentl reiuces the price of its proiucts by 10%. It expects to make up for
the lost revenue from an increase in sales. Which of the folloting is true of this scenario?
A. The government's control of most of the utlites incluiing poter ani tater supply represents
monopolistc competton.
B. The poter supply iniustry in Travnia is oligopolistc in nature.
C. The competton in the botlei-tater iniustry represents pure competton.
D. Pentl's current pricing strategy can be termei as preiatory pricing.
E. A price tar touli erupt if the other irms reiucei pricese tooe ani forcei Pentl to reiuce prices
further.
Aoswee: E
Questoo: 17
Pop-Marte a chain of iiscount stores in the U.S.e procures its proiucts from many suppliers. Iniigo is
one among hunireis of other suppliers tho supply poultry proiucts to Pop-Mart ani other retailers.
The price of the proiucts is ofen iictatei by the iemani from consumers. Which of the folloting is
true of this scenario?
A. Pop-Mart's competton tith other retailers represents pure competton.
B. Iniigo is competng in an oligopolistc market ani iepenis on compettors to increase proiuct
prices.
C. Iniigo can carve an iientty for itself ani move into a monopolistcally compettve market by
braniing its poultry proiucts.
D. Pop-Mart's suppliers cannot iecommoiitze their proiucts in orier to make more money.
E. The large number of suppliers iniicates that the poultry iniustry iniicates monopolistc
competton.
Aoswee: C
Questoo: 18
A seller's costs are usually ieterminei iuring or afer a proiuct is maiee tith a speciiei percentage
or iollar amount aiiei to the cost to establish a price. In this casee the organizaton is using _____
pricing.
A. skimming
B. iemani-basei

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C. iiferental
D. cost-plus
E. expense-basei
Aoswee: D
Questoo: 19
Fine an online clothes retailere sells proiucts from multple branis. Some of the branis are expensive.
Cllinge a brani of t-shirtse usually sells proiucts at more than $50 a piece. During Christmase
hotevere Fin ofers a 25% iiscount on Clling that entces non-regular customers of Clling to pick up
its proiucts. The increase in sales volume ofsets the iiscount oferei. In this casee Fin is using a ____
pricing strategy.
A. status quo
B. target return
C. everyiay lot
D. high/lot
E. preiatory
Aoswee: D
Questoo: 20
A Macy's manager iesigns the casual clothing iepartment such that one of Macy's private label pairs
of jeanse pricei at $24.99e is positonei next to a natonal brani of jeanse such as Levise pricei at
$39.99. What is the manager atemptng to accomplish?
A. Everyiay lot prices strategy
B. Oii-even pricing strategy
C. Prestge pricing strategy
D. Special-event pricing strategy
E. Reference pricing strategy
Aoswee: E

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