FREE MARKETING AND STUDY GAMES ABOUT MKT 300

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FREE MARKETING AND STUDY GAMES ABOUT MKT 300

CHAPTER 14 EXAM QUESTIONS

Actual Qs and Ans Expert-Verified Explanation

This Exam contains:

-Guarantee passing score -38 Questions and Answers -format set of multiple-choice -Expert-Verified Explanation

Question 1: Prestige Products or Services

Answer:

Those that customers purchase for status rather than functionality.

Question 2: Gray Market

Answer:

Employs irregular but not necessary illegal methods; generally, it legally circumvents authorized channels of distribution to sell goods at prices lower than those intended by the manufacturer.

Question 3: Variable Costs

Answer:

Those costs, primarily labor and materials, that vary with production volume.

Question 4: Contribution Per Unit

Answer:

Equals the price less the variable cost per unit. Variable used to determine the break-even point in units.

Question 5: Price War

Answer:

Occurs when two or more firms compete primarily by lowering their prices.

Question 6: Break-Even Analysis

Answer:

Technique used to examine the relationships among cost, price, revenue, and profit over different levels of production and sales to determine the break-even point.

Question 7: Sales-Oriented

Answer:

Set prices very low to generate new sales and take sales away from competitors, even if profits suffer.

Question 8: Fixed Costs

Answer:

Those costs that remain essentially at the same level, regardless of any changes in the volume of production.

Question 9: Pure Competition

Answer:

Occurs when different companies sell commodity products that consumers perceive as substitutable; price usually is set according to the laws of supply and demand.

Question 10: Break-Even Point

Answer:

The point at which the number of units sold generates just enough revenue to equal the total costs; at this point, profits are zero.

Question 11: Income Effect

Answer:

Refers to the change in the quantity of a product demanded by consumers due to a change in their income.

Question 12: Premium Pricing

Answer:

A competitor-based pricing method by which the firm deliberately prices set for competing products to capture those consumers who always shop for the best or for whom price doesn't matter.

Question 13: Substitute Products

Answer:

Products for which changes in demand are negatively related; that is, a percentage increase in the quantity demanded for product A results in a % decrease in the quantity demanded for product B.

Question 14: Inelastic

Answer:

Refers to a market for a product or service that is price insensitive; that is, relatively small changes in price will not generate large changes in the quantity demanded.

Question 15: Monopolistic Competition

Answer:

Occurs when there are many firms that sell closely related but not homogeneous products; these products may be viewed as substitutes but are not perfect substitutes.

Question 16: Substitution Effect

Answer:

Refers to consumers' ability to substitute other products for the focal brand, thus increasing the price elasticity of demand for the focal brand.

Question 17: Price Elasticity of Demand

Answer:

Measures how change in a price affect the quantity of the product demanded; specifically, the ratio of the percentage change in quality demanded to the percentage change in price.

Question 18: Competitor Orientation

Answer:

A company objective based on the premise that the firm should measure itself primarily against its competition.

Question 19: Maximizing Profits

Answer:

A profit strategy that relies primarily on economic theory. If a firm can accurately specify a mathematical model that captures all the factors req to explain & predict sales & profits, it should be able to identify the price at which its profits maxed.

Question 20: Competitor-Oriented

Answer:

To discourage more competitors from entering the market, set prices very low.

Question 21: Total Cost

Answer:

The sum of variable and fixed costs.

Question 22: Predatory Pricing

Answer:

A firm's practice of setting a very low price for one or more of its products with the intent to drive its competition out of business; illegal under both the Sherman Antitrust Act and FTC Act.

Question 23: Oligopolistic Competition

Answer:

Occurs when only a few firms dominate the market.

Question 24: Profit-Oriented

Answer:

Institute a companywide policy that all products must provide for at least an 18% profit margin to reach a particular profit goal for the firm.

Question 25: Complimentary Products

Answer:

Products whose demand curves are positively related, such that they rise or fall together; a percentage increase in demand for one results in a percentage increase in demand for the other.