Reference no: EM131117206
1. Jane Westerlund owns a picture-framing store, The Caplow Co. Her price must cover costs for a typical framed picture, which consists of $8 for glass, $2 for matting, $15 for the frame, and $35 for the labor involved. She must also cover monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $300 for advertising, and $3,500 for her salary. The Caplow Co. wants a target profit of $55,000 based on a monthly volume of 1,000 picture frames sold to expand the number of stores. What price should Westerlund charge for a picture frame?
2. The prices of products sold in vending machines are a good example of which type of competition-oriented pricing?
3. __________ represents the vertical axis of a demand curve graph.
Price per unit
Potential profit in dollars
4. Price elasticity of demand refers to
the range of product features that can be altered without losing customers.
the ease and speed at which prices can be changed without costs exceeding revenues.
the percentage change in quantity demanded relative to the percentage change in price.
the percentage change in quantity demanded relative to the percentage change in units sold.
the additional profits larger organizations “bank” to prevent losses due to sudden changes in consumer demand.
5. North Safety Products manufactures butyl gloves that offer permeation resistance to gas or water vapors for workers that use dangerous chemicals like ketones. The company has fixed costs of $10 million for its butyl glove production and unit variable costs of $5 per pair. If the company charges $15 per pair, how many pairs of gloves must it sell to break even?
6. The Precision Writing Instruments Company makes a high-end pen known as the Cordova. Materials cost per pen is $6. Labor cost per pen is $5. Production overhead is $1,000,000. Advertising and promotion is $1,000,000. What is the total cost for sales of 500,000 units of the Cordova design?
7. Which of the following would be an example of a variable cost for a publication like SHAPE magazine that is targeted to young women seeking a healthier lifestyle?
an increase in women in targeted demographics
the paper and ink for printing the magazine
the salary of the publisher’s CEO
the rent for a parking garage used by employees
the cost of a half-page ad in SHAPE
8. A __________ visually shows that the total revenue curve and the total cost curve intersect at a point of zero profit.
sales response function
9. Which of the following statements about profit objectives is most accurate?
Managers in the United States have long been praised for their insistence on managing for long-run profits.
Profit objectives are measured in terms of return on investment or return on assets.
Firms that are interested in strategic planning always establish a maximize current profit objective.
An organization’s chief marketing officer (CMO) usually establishes a target return on expense objective.
Market share and unit volume are two types of profit objectives.
10. Which of the following is NOT a pricing constraint?
demand for the product class
cost of producing and marketing the product
social responsibility impact of the product on society
newness of the product or stage in its product life cycle
11. Guitar Center recently instituted “no haggle” selling prices, much to the dismay of some musicians who enjoyed bargaining and getting a better deal than a novice. But now, no matter which Guitar Center store a customer visits, that person will be quoted the same price for the same guitar. This is an example of a __________ policy.
12. A(n) __________ involves setting different prices for products and services depending on individual buyers and purchase situations in light of demand, cost, and competitive factors.
cost-plus pricing policy
above-, at-, or below-market pricing approach.
13. If you buy one pair of UVex Clear UVExtreme safety eyewear in the winter, the cost is $7.40. But if you buy 10 pairs in a single purchase, the price per pair is reduced to $6.85, a total savings of $5.50. This is an example of a
14. To enable manufacturers to smooth out manufacturing peaks and troughs and thereby contribute to more efficient production, manufacturers offer