Question 31

Many consumers are willing to pay $100 for a perfume that contains $10 worth of scent because the perfume is from a well-known brand. What kind of a pricing is the company depending on?

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Question options:

a) Going-rate pricing

b) Image pricing

c) Market-skimming pricing

d) Target pricing

Question 32

A manufacturer has invested $750,000 in a new product and wants to set a price to earn a 15 percent ROI. The cost per unit is $18 and the company expects to sell 50,000 units in the first year. Calculate the company’s target-return price for this product.

Question options:

a) $20.25

b) $18.23

c) $18.10

d) $20.70

Question 33

__________ cost is the cost per unit at that level of production.

Question options:

a) Target

b) Average

c) Marginal

d) Opportunity

Question 34

When a company introduces a product at a very high price and then gradually drops the price over time, it is pursuing a __________ strategy.

Question options:

a) market-penetration pricing

b) market-skimming pricing

c) value-pricing

d) switching cost

Question 35

The decline in the average cost of production with accumulated production experience is called the:

Question options:

a) demand curve.

b) supply chain.

c) learning curve.

d) value chain.

Question 36

If demand changes considerably with a small change in price, the demand is said to be:

Question options:

a) unit elastic.

b) elastic.

c) inelastic.

d) marginal.

Question 37

Costs that differ directly with the level of production are known as _____ costs.

Question options:

a) fixed

b) overhead

c) opportunity

d) variable

Question 38

A market-penetration pricing strategy is most suitable when:

Question options:

a) a low price slows down market growth.

b) production and distribution costs fall with accumulated production experience.

c) a high price dissuades potential competitors from entering the market.

d) the market is characterized by inelastic demand.

Question 39

Companies that believe that a higher sales volume leads to lower unit costs and higher long-run profits are attempting to:

Question options:

a) maximize their market share.

b) skim the market.

c) become a product-quality leader.

d) merely survive in the market.

Question 40

A company must make payments each month for rent, heat, interest, and salaries. These are _____ costs.

Question options:

a) total

b) fixed

c) variable

d) opportunity

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