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Multiple Choice Questions

 

 

31. Which of the following pricing strategies involves setting the highest possible product price?

A. Social objectives

B. Penetration

C. Survival

D. Skimming

 

 

32. Penetration pricing will most benefit a firm when:

A. customers in a market are very price-insensitive.

B. production costs are likely to increase with increasing volume.

C. the firm has a monopoly in a particular market.

D. it needs to set a low price in order to capture market share.

 

 

33. The penetration pricing strategy is most appropriate for a firm to pursue when:

A. the market in question is large.

B. customers are relatively insensitive to price.

C. the firm’s costs are high compared to competitors’.

D. the firm is pursuing a differentiated strategy.

 

 

34. A firm following a harvesting strategy would set product prices:

A. relatively low, only slightly above costs.

B. at the cost price, in order to penetrate the market.

C. relatively high, to maintain margins and maximize profits.

D. low, to maintain a presence in the market.

 

 

35. A firm observes that a particular product-market in which it is involved is in its late majority stage. So it adopts the differentiated defender strategy; and sets price to maintain margins and maximize profit or return on investment even though some customers may switch to competitive brands or substitutes. In view of this data we can say that the firm has adopted the _____ pricing objective.

A. penetration

B. skimming

C. survival

D. harvesting

 

 

36. A museum offers lower ticket prices for children from schools in the economically disadvantaged areas of the city. This is an example of _____ pricing.

A. skimming

B. prestige

C. social

D. harvesting

 

 

37. When firms pioneer the development of a new product-market, they may set the price very high and appeal to only the least price-sensitive segment of potential customers in order to maximize short-term profits. This is a _____.

A. penetration pricing policy

B. harvesting policy

C. skimming price policy

D. survival

 

 

38. The demand curve depicts the relationship between:

A. profitability and demand.

B. product costs and price.

C. price and profitability.

D. price and demand.

 

 

39. Which of the following best describes the sunk-investment effect on price sensitivity?

A. Customers are less price-sensitive when there are no acceptable substitutes for a product.

B. Customers are less price-sensitive when the purchase is necessary to gain full benefit from assets previously bought.

C. Customers are less price-sensitive when their expenditure for the product or service is a relatively low proportion of their total income.

D. Customers are less price-sensitive in the short run when they cannot store large quantities of the product as a hedge against future price increases.

 

 

40. Which of the following best describes the unique-value effect on price sensitivity?

A. Customers are less price-sensitive when there are no acceptable substitutes for a product.

B. Customers are less price-sensitive when the purchase is necessary to gain full benefit from assets previously bought.

C. Customers are less price-sensitive when their expenditure for the product or service is a relatively low proportion of their total income.

D. Customers are less price-sensitive in the short run when they cannot store large quantities

of the product as a hedge against future price increases.

 

 

 

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