BUAD 332 EXAM 3/ 300 ACTUAL QUESTIONS AND
CORRECT ANSWERS WITH RATIONALE LATEST
UPDATE ALREADY GRADED A+
The BUAD 332 Exam 3 covers the strategic and tactical elements of
marketing, focusing on pricing, distribution, and integrated marketing
communications. Key pricing topics include elasticity, market structures, and
new-product pricing strategies like skimming and penetration. Distribution
content addresses channel design, management, and retail classification. The
promotion section examines advertising objectives, budgeting methods
(affordable, percentage-of-sales, competitive-parity, objective-and-task),
media metrics (reach, frequency, CPM), and the five promotional tools:
advertising, sales promotion, public relations, personal selling, and direct
marketing. The exam integrates these concepts with real-world applications
and case analyses.
1. Narrowly defined, what is a price?
A) The total cost of production
B) The amount of money charged for a product or service
C) The value a customer receives from a product
D) The profit margin of a company
Answer: B
Rationale: Narrowly defined, price is simply the amount of money charged for a
product or service. This is the most basic and direct definition of price in
marketing, distinguishing it from broader interpretations that include non-monetary
costs.
2. Broadly defined, what does price represent?
A) Only the monetary cost to the consumer
B) The sum of all values that consumers exchange for the benefits of having or
using the product or service
C) The manufacturer's suggested retail price
D) The cost of goods sold
Answer: B
,Rationale: Broadly defined, price encompasses the total sacrifice a consumer
makes to obtain a product or service. This includes not just money but also time,
effort, convenience, and other non-monetary costs that consumers exchange for the
benefits received.
3. A pair of boots sells for $88 on Amazon and $88 at Dillard's with same tax and
no shipping. Which statement best describes this scenario?
A) The prices are identical because the dollar amount is the same
B) The Amazon price may be lower due to convenience and time savings
C) The Dillard's price may be lower due to immediate availability and ability to try
on
D) The true price depends on the customer's perceived sacrifice in each scenario
Answer: D
Rationale: Price is about sacrifice, not just money. At Amazon, the sacrifice
includes shipping wait time and inability to try on the boots. At Dillard's, the
sacrifice includes driving time, gas, and parking. The "lower price" depends
entirely on what each individual customer values and is willing to sacrifice.
4. Price is best thought of as:
A) The manufacturer's cost p lus markup
B) What the market will bear
C) Sacrifice
D) The value proposition
Answer: C
Rationale: Price represents what consumers give up to obtain a product or service.
This perspective—price as sacrifice—captures both monetary and non-monetary
costs consumers incur, making it a more comprehensive and useful concept than a
simple dollar amount.
5. Which factor is classified as an internal factor affecting pricing decisions?
A) Nature of the market and demand
B) Competition
C) Marketing objectives
D) Economic conditions
Answer: C
Rationale: Marketing objectives, along with marketing mix strategies, costs, and
organizational considerations, are internal factors that directly affect pricing
decisions. External factors include market nature, competition, and environmental
factors like the economy and government.
,6. Which of the following is an external factor affecting pricing decisions?
A) Marketing mix strategies
B) Organizational considerations
C) Competition
D) Costs
Answer: C
Rationale: Competition is an external factor affecting pricing decisions. External
factors include the nature of the market and demand, competition, and other
environmental factors such as the economy, government actions, reseller reactions,
and social concerns.
7. When a company sets low prices hoping to increase demand, which marketing
objective is being pursued?
A) Current profit maximization
B) Market share leadership
C) Survival
D) Product quality leadership
Answer: C
Rationale: Survival is a marketing objective where companies use low prices
hoping to increase demand. This defensive strategy is often employed when a
company faces intense competition, excess capacity, or changing consumer needs
that threaten its ability to remain in business.
8. Choosing the price that produces the maximum current profit reflects which
marketing objective?
A) Survival
B) Current profit maximization
C) Market share leadership
D) Product quality leadership
Answer: B
Rationale: Current profit maximization involves selecting the price that generates
the highest immediate profit. This objective focuses on short-term financial
performance rather than long-term market position or growth.
9. Setting prices as low as possible to become the market share leader represents
which objective?
A) Survival
B) Current profit maximization
C) Market share leadership
D) Product quality leadership
, Answer: C
Rationale: Market share leadership is an objective where companies set low prices
to attract a large number of buyers and capture dominant market share. This
strategy often sacrifices short-term profits for long-term market position and
economies of scale.
10. High prices to cover higher performance quality and R&D costs reflect which
marketing objective?
A) Survival
B) Current profit maximization
C) Market share leadership
D) Product quality leadership
Answer: D
Rationale: Product quality leadership uses high prices to signal superior quality and
to recoup substantial research and development investments. This strategy is
common in industries like pharmaceuticals, where innovation and quality justify
premium pricing.
11. Costs that do not vary with sales or production levels are called:
A) Variable costs
B) Fixed costs (overhead)
C) Total costs
D) Marginal costs
Answer: B
Rationale: Fixed costs, also known as overhead, remain constant regardless of
production or sales volume. Examples include executive salaries, rent, insurance,
and property taxes. These costs must be covered regardless of how many units are
sold.
12. Costs that do vary directly with the level of production are called:
A) Fixed costs
B) Variable costs
C) Total costs
D) Sunk costs
Answer: B
Rationale: Variable costs change in direct proportion to the level of production or
sales. Examples include raw materials, packaging, and direct labor. As production
increases, variable costs increase; as production decreases, variable costs decrease.
13. The sum of fixed and variable costs for any given level of production is called:
CORRECT ANSWERS WITH RATIONALE LATEST
UPDATE ALREADY GRADED A+
The BUAD 332 Exam 3 covers the strategic and tactical elements of
marketing, focusing on pricing, distribution, and integrated marketing
communications. Key pricing topics include elasticity, market structures, and
new-product pricing strategies like skimming and penetration. Distribution
content addresses channel design, management, and retail classification. The
promotion section examines advertising objectives, budgeting methods
(affordable, percentage-of-sales, competitive-parity, objective-and-task),
media metrics (reach, frequency, CPM), and the five promotional tools:
advertising, sales promotion, public relations, personal selling, and direct
marketing. The exam integrates these concepts with real-world applications
and case analyses.
1. Narrowly defined, what is a price?
A) The total cost of production
B) The amount of money charged for a product or service
C) The value a customer receives from a product
D) The profit margin of a company
Answer: B
Rationale: Narrowly defined, price is simply the amount of money charged for a
product or service. This is the most basic and direct definition of price in
marketing, distinguishing it from broader interpretations that include non-monetary
costs.
2. Broadly defined, what does price represent?
A) Only the monetary cost to the consumer
B) The sum of all values that consumers exchange for the benefits of having or
using the product or service
C) The manufacturer's suggested retail price
D) The cost of goods sold
Answer: B
,Rationale: Broadly defined, price encompasses the total sacrifice a consumer
makes to obtain a product or service. This includes not just money but also time,
effort, convenience, and other non-monetary costs that consumers exchange for the
benefits received.
3. A pair of boots sells for $88 on Amazon and $88 at Dillard's with same tax and
no shipping. Which statement best describes this scenario?
A) The prices are identical because the dollar amount is the same
B) The Amazon price may be lower due to convenience and time savings
C) The Dillard's price may be lower due to immediate availability and ability to try
on
D) The true price depends on the customer's perceived sacrifice in each scenario
Answer: D
Rationale: Price is about sacrifice, not just money. At Amazon, the sacrifice
includes shipping wait time and inability to try on the boots. At Dillard's, the
sacrifice includes driving time, gas, and parking. The "lower price" depends
entirely on what each individual customer values and is willing to sacrifice.
4. Price is best thought of as:
A) The manufacturer's cost p lus markup
B) What the market will bear
C) Sacrifice
D) The value proposition
Answer: C
Rationale: Price represents what consumers give up to obtain a product or service.
This perspective—price as sacrifice—captures both monetary and non-monetary
costs consumers incur, making it a more comprehensive and useful concept than a
simple dollar amount.
5. Which factor is classified as an internal factor affecting pricing decisions?
A) Nature of the market and demand
B) Competition
C) Marketing objectives
D) Economic conditions
Answer: C
Rationale: Marketing objectives, along with marketing mix strategies, costs, and
organizational considerations, are internal factors that directly affect pricing
decisions. External factors include market nature, competition, and environmental
factors like the economy and government.
,6. Which of the following is an external factor affecting pricing decisions?
A) Marketing mix strategies
B) Organizational considerations
C) Competition
D) Costs
Answer: C
Rationale: Competition is an external factor affecting pricing decisions. External
factors include the nature of the market and demand, competition, and other
environmental factors such as the economy, government actions, reseller reactions,
and social concerns.
7. When a company sets low prices hoping to increase demand, which marketing
objective is being pursued?
A) Current profit maximization
B) Market share leadership
C) Survival
D) Product quality leadership
Answer: C
Rationale: Survival is a marketing objective where companies use low prices
hoping to increase demand. This defensive strategy is often employed when a
company faces intense competition, excess capacity, or changing consumer needs
that threaten its ability to remain in business.
8. Choosing the price that produces the maximum current profit reflects which
marketing objective?
A) Survival
B) Current profit maximization
C) Market share leadership
D) Product quality leadership
Answer: B
Rationale: Current profit maximization involves selecting the price that generates
the highest immediate profit. This objective focuses on short-term financial
performance rather than long-term market position or growth.
9. Setting prices as low as possible to become the market share leader represents
which objective?
A) Survival
B) Current profit maximization
C) Market share leadership
D) Product quality leadership
, Answer: C
Rationale: Market share leadership is an objective where companies set low prices
to attract a large number of buyers and capture dominant market share. This
strategy often sacrifices short-term profits for long-term market position and
economies of scale.
10. High prices to cover higher performance quality and R&D costs reflect which
marketing objective?
A) Survival
B) Current profit maximization
C) Market share leadership
D) Product quality leadership
Answer: D
Rationale: Product quality leadership uses high prices to signal superior quality and
to recoup substantial research and development investments. This strategy is
common in industries like pharmaceuticals, where innovation and quality justify
premium pricing.
11. Costs that do not vary with sales or production levels are called:
A) Variable costs
B) Fixed costs (overhead)
C) Total costs
D) Marginal costs
Answer: B
Rationale: Fixed costs, also known as overhead, remain constant regardless of
production or sales volume. Examples include executive salaries, rent, insurance,
and property taxes. These costs must be covered regardless of how many units are
sold.
12. Costs that do vary directly with the level of production are called:
A) Fixed costs
B) Variable costs
C) Total costs
D) Sunk costs
Answer: B
Rationale: Variable costs change in direct proportion to the level of production or
sales. Examples include raw materials, packaging, and direct labor. As production
increases, variable costs increase; as production decreases, variable costs decrease.
13. The sum of fixed and variable costs for any given level of production is called:
