Marketing BA 370 Olson Final Exam
Questions and Correct Answers 2025-
2026 Graded A+.
Define price - Answer overall sacrifice a consumer is willing to make- money, time, energy- to
acquire a specific product or service
Name the 5 Cs of pricing - Answer 1. company objectives
2. customers
3. costs
4. competition
5. channel members
Name 4 company objectives - Answer 1. profit-oriented
2. sales-oriented
3. competitor-oriented
4. customer-oriented
Define profit orientation - Answer company objective that can be implemented by focusing
on target profit pricing, maximizing profits, or target return pricing
Define target profit pricing - Answer pricing strategy implemented by firms when they have a
particular profit goal as their overriding concern; uses price to stimulate a certain level of sales
at a certain profit per unit
Define maximizing profits - Answer profit strategy that relies primarily on economic theory. if
a firm can accurately specify a mathematical model that captures all the factors required to
explain and predict sales and profits, it should be able to identify the price at which its profits
are maximized
Define target return pricing - Answer pricing strategy implemented by firms less concerned
with the absolute level of profits and more interested in the rate at which their profits are
generated relative to their investments; designed to produce a specific return on investment,
usually expressed as a percentage of sales
,Define premium pricing - Answer competitor-based pricing method by which the firm
deliberately prices a product above the prices set for competing products to capture those
consumers who always shop for the best or for whom price does not matter
Define competitor orientation - Answer company objective based on the premise that the
firm should measure itself primarily against its competition
Define competitive parity - Answer firm's strategy of setting prices that are similar to those
of major competitors
Define status quo pricing - Answer competitor-oriented strategy in which a firm changes
prices only to meet those of competition
Define customer orientation - Answer company objective based on the premise that the firm
should measure itself primarily according to whether it meets its customers' need
Define demand curve - Answer shows how many units of product or service consumers will
demand during a specific period at different prices
Define prestige products or services - Answer products and services that consumers
purchase for status rather than functionality
Define price elasticity of demand - Answer measures how changes in a price affect the
quantity of the product demanded; specifically, the ratio of the percentage change in quantity
demanded to the percentage change in price
What is the price elasticity of demand formula? - Answer (%change in quantity
demanded)/(%change in price)
Define elastic - Answer refers to a market for a product or service that is price sensitive; that
is, relatively small changes in price will generate fairly large changes in the quantity demanded
Define 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
,Define income effect - Answer change in the quantity of a product demanded by consumers
due to a change in their income
Define substitution effect - Answer consumers' ability to substitute other products for the
focal brand, thus increasing the price elasticity of demand for the focal brand
Define cross-price elasticity - Answer percentage change in demand for product A that
occurs in response to a percentage change in price of product B; see also complementary
products
Define complementary 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
Define 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
percentage decrease in the quantity demanded for product B
Define variable costs - Answer those costs, primarily labor and material, that vary with
production volume
Define fixed costs - Answer costs that remain essentially at the same level, regardless of any
changes in the volume of production
Define total cost - Answer sum of variable and fixed costs
Define 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
Define break-even point - Answer point at which the number of units sold generates just
enough revenue to equal the total costs; at this point, profits are zero
Define contribution per unit - Answer price less the variable cost per unit. variable used to
determine the break-even point in units
, 2. oligopoly
3. monopolistic competition
4. pure competition
Define monopoly - Answer one firm provides the product or service in a particular industry
less price competition, fewer firms
Define oligopolistic competition - Answer competition that occurs when only a few firms
dominate the market
more price competition, fewer firms
Define price war - Answer situation (or competition) that occurs when two or more firms
compete primarily by lowering their prices
Define predatory pricing - Answer 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 the Federal Trade Commission Act
Define monopolistic competition - Answer competition that 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
less price competition, many firms
Define pure competition - Answer competition that occurs when different companies sell
commodity products that consumers perceive as substitutable; price usually is set according to
the laws of supply and demand
more price competition, many firms
Define channel members - Answer part of the organized network of institutions which, in
combination, perform all the functions required to link producers with end users
manufacturers, wholesalers, and retailers
Define retailers' cooperative - Answer marketing channel intermediary that buys collectively
for a group of retailers to achieve price and promotion economies of scale. it is similar to a
wholesaler, except that the retailer members have some control over, and sometimes
Questions and Correct Answers 2025-
2026 Graded A+.
Define price - Answer overall sacrifice a consumer is willing to make- money, time, energy- to
acquire a specific product or service
Name the 5 Cs of pricing - Answer 1. company objectives
2. customers
3. costs
4. competition
5. channel members
Name 4 company objectives - Answer 1. profit-oriented
2. sales-oriented
3. competitor-oriented
4. customer-oriented
Define profit orientation - Answer company objective that can be implemented by focusing
on target profit pricing, maximizing profits, or target return pricing
Define target profit pricing - Answer pricing strategy implemented by firms when they have a
particular profit goal as their overriding concern; uses price to stimulate a certain level of sales
at a certain profit per unit
Define maximizing profits - Answer profit strategy that relies primarily on economic theory. if
a firm can accurately specify a mathematical model that captures all the factors required to
explain and predict sales and profits, it should be able to identify the price at which its profits
are maximized
Define target return pricing - Answer pricing strategy implemented by firms less concerned
with the absolute level of profits and more interested in the rate at which their profits are
generated relative to their investments; designed to produce a specific return on investment,
usually expressed as a percentage of sales
,Define premium pricing - Answer competitor-based pricing method by which the firm
deliberately prices a product above the prices set for competing products to capture those
consumers who always shop for the best or for whom price does not matter
Define competitor orientation - Answer company objective based on the premise that the
firm should measure itself primarily against its competition
Define competitive parity - Answer firm's strategy of setting prices that are similar to those
of major competitors
Define status quo pricing - Answer competitor-oriented strategy in which a firm changes
prices only to meet those of competition
Define customer orientation - Answer company objective based on the premise that the firm
should measure itself primarily according to whether it meets its customers' need
Define demand curve - Answer shows how many units of product or service consumers will
demand during a specific period at different prices
Define prestige products or services - Answer products and services that consumers
purchase for status rather than functionality
Define price elasticity of demand - Answer measures how changes in a price affect the
quantity of the product demanded; specifically, the ratio of the percentage change in quantity
demanded to the percentage change in price
What is the price elasticity of demand formula? - Answer (%change in quantity
demanded)/(%change in price)
Define elastic - Answer refers to a market for a product or service that is price sensitive; that
is, relatively small changes in price will generate fairly large changes in the quantity demanded
Define 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
,Define income effect - Answer change in the quantity of a product demanded by consumers
due to a change in their income
Define substitution effect - Answer consumers' ability to substitute other products for the
focal brand, thus increasing the price elasticity of demand for the focal brand
Define cross-price elasticity - Answer percentage change in demand for product A that
occurs in response to a percentage change in price of product B; see also complementary
products
Define complementary 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
Define 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
percentage decrease in the quantity demanded for product B
Define variable costs - Answer those costs, primarily labor and material, that vary with
production volume
Define fixed costs - Answer costs that remain essentially at the same level, regardless of any
changes in the volume of production
Define total cost - Answer sum of variable and fixed costs
Define 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
Define break-even point - Answer point at which the number of units sold generates just
enough revenue to equal the total costs; at this point, profits are zero
Define contribution per unit - Answer price less the variable cost per unit. variable used to
determine the break-even point in units
, 2. oligopoly
3. monopolistic competition
4. pure competition
Define monopoly - Answer one firm provides the product or service in a particular industry
less price competition, fewer firms
Define oligopolistic competition - Answer competition that occurs when only a few firms
dominate the market
more price competition, fewer firms
Define price war - Answer situation (or competition) that occurs when two or more firms
compete primarily by lowering their prices
Define predatory pricing - Answer 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 the Federal Trade Commission Act
Define monopolistic competition - Answer competition that 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
less price competition, many firms
Define pure competition - Answer competition that occurs when different companies sell
commodity products that consumers perceive as substitutable; price usually is set according to
the laws of supply and demand
more price competition, many firms
Define channel members - Answer part of the organized network of institutions which, in
combination, perform all the functions required to link producers with end users
manufacturers, wholesalers, and retailers
Define retailers' cooperative - Answer marketing channel intermediary that buys collectively
for a group of retailers to achieve price and promotion economies of scale. it is similar to a
wholesaler, except that the retailer members have some control over, and sometimes
