1
HFT 4502 Test #3 Questions with Correct Answers |
Updated (100% Correct Answers)
Test Question: Cost? Answer: Is the most important factor for setting prices. Cost
represents the floor
Test Question: For most goods what direction is the slope of the demand curve?
Answer: Downward sloping
Test Question: break even = Answer: fixed costs/ contribution margin
Test Question: Contribution Margin = Answer: sale price - fixed costs
Test Question: Competition based pricing is also referred to as? Answer: going
rate pricing
Test Question: Competition based pricing ignores what? Answer: customer
perceptions in the market place
Price Answer: the amount of money charged for a product or service
or
the sum of values consumers exchange for the benefits of having or using the
product or service
Price Elasticity Answer: the percent change in demand resulting from a given
change in price
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Perfectly Inelastic Answer: When price goes up, no change in quantity
demanded occurs. (Nothing is perfectly inelastic but gas and healthcare are the
closest examples)
Perfectly Elastic Answer: When price goes up, quantity demanded drops to zero
Effects on total revenue on price increases and decreases due to inelasticity and
elasticity... Answer: inelastic: $ rises, TR rises
$ falls, TR falls
elastic: $ rises, TR falls
$ falls, TR rises
Cost-plus pricing Answer: adding a standard markup to the cost of the product
Value-based pricing Answer: pricing based on perceived value of the offering
and one must understand the value a segment places on the product
Competition-based pricing Answer: watch competitors rather than
costs/demands, represents collective wisdom, avoids price wars
Price Discrimination Answer: charging different prices to different market
segments based on the elasticity's (willingness to pay) for the same product. (ex.
coupons, senior discounts, early bird special)
Value pricing Answer: everyday low pricing and is risky because companies must
have the ability to cut costs and be ready to engage in price wars.
Promotional Pricing Answer: Temporary reduction of price to below list or cost
© 2026 All rights reserved
HFT 4502 Test #3 Questions with Correct Answers |
Updated (100% Correct Answers)
Test Question: Cost? Answer: Is the most important factor for setting prices. Cost
represents the floor
Test Question: For most goods what direction is the slope of the demand curve?
Answer: Downward sloping
Test Question: break even = Answer: fixed costs/ contribution margin
Test Question: Contribution Margin = Answer: sale price - fixed costs
Test Question: Competition based pricing is also referred to as? Answer: going
rate pricing
Test Question: Competition based pricing ignores what? Answer: customer
perceptions in the market place
Price Answer: the amount of money charged for a product or service
or
the sum of values consumers exchange for the benefits of having or using the
product or service
Price Elasticity Answer: the percent change in demand resulting from a given
change in price
© 2026 All rights reserved
, 2
Perfectly Inelastic Answer: When price goes up, no change in quantity
demanded occurs. (Nothing is perfectly inelastic but gas and healthcare are the
closest examples)
Perfectly Elastic Answer: When price goes up, quantity demanded drops to zero
Effects on total revenue on price increases and decreases due to inelasticity and
elasticity... Answer: inelastic: $ rises, TR rises
$ falls, TR falls
elastic: $ rises, TR falls
$ falls, TR rises
Cost-plus pricing Answer: adding a standard markup to the cost of the product
Value-based pricing Answer: pricing based on perceived value of the offering
and one must understand the value a segment places on the product
Competition-based pricing Answer: watch competitors rather than
costs/demands, represents collective wisdom, avoids price wars
Price Discrimination Answer: charging different prices to different market
segments based on the elasticity's (willingness to pay) for the same product. (ex.
coupons, senior discounts, early bird special)
Value pricing Answer: everyday low pricing and is risky because companies must
have the ability to cut costs and be ready to engage in price wars.
Promotional Pricing Answer: Temporary reduction of price to below list or cost
© 2026 All rights reserved
