BUAD 332 TEST PAPER 3 2026 QUESTIONS
WITH ALL CORRECT SOLUTIONS
◉ In class example: Buying the same pair of boots from Amazon or
Dillard's. Are they the same price? Answer: Would argue no. One you
can get immediately, the other you would have to wait to have
shipped. You could try on the boot in store to ensure the right size.
You would have to wait for an exchange if you ordered the wrong
size. Ordering online allows you to not have to make a trip to a store.
◉ What are some internal factors affecting price decisions? Answer:
- Marketing objectives
- Marketing mix strategies
- Costs
- Organizational considerations
◉ What are some external factors affecting price decisions? Answer:
- Nature of the market and demand
- Competition
- Other environmental factors (economy, government, resellers,
social concerns)
,◉ What are the marketing objectives that affect pricing decisions?
Answer: - Survival (low prices hoping to increase demand)
- Current Profit Maximization (choose the price that produces the
maximum current profit)
- Market Share Leadership (low as possible prices to become the
market share leader)
- Product Quality Leadership (high prices to cover higher
performance quality and R&D)
◉ What are the costs that affect price? Answer: - Fixed Costs
- Variable Costs
- Total Costs
◉ What are Fixed Costs? Answer: Costs that don't vary with sales or
production levels (Overhead)
◉ What are some examples of Fixed Costs? Answer: Executive
Salaries, Rent
◉ What are Variable Costs? Answer: Costs that do vary directly with
the level of production
◉ What is an example of Variable Costs? Answer: Raw Materials
,◉ What are total costs? Answer: The sum of the fixed and variable
costs for any given level of production.
◉ How should you price products in relation to costs? Answer: You
should price products greater than variable costs. If you set it below
total costs, you might be okay in the short run.
◉ What determines the price floor? Answer: Costs
◉ What determines the price ceiling? Answer: Customers
◉ What are some external factors that affect pricing decisions?
Answer: - Markets and demand
- Competitors' cost, prices, and offers
- Other external factors (economic conditions, reseller reactions,
government actions, and social concerns)
◉ What is a pure competition? Answer: Many buyers and sellers
who have little effect on the price
◉ What is an example of pure competition? Answer: Wheat
◉ What is monopolistic competition? Answer: Many buyers and
sellers who trade over a range of prices.
, ◉ What is an example of monopolistic competition? Answer: Jeans
◉ What is oligopolistic competition? Answer: Few sellers who are
sensitive to each other's pricing/marketing strategies
◉ What is an example of oligopolistic
competition? Answer: Airline industry
◉ What is a pure monopoly? Answer: a single seller
◉ What is an example of pure monopoly? Answer: Utility company
◉ Inelastic demand Answer: demand hardly changes with a small
change in price
◉ Elastic demand Answer: demand changes greatly with a small
change in price
◉ Which demand would marketers like more? Inelastic or Elastic
Answer: Inelastic demand because value is seen, not price
WITH ALL CORRECT SOLUTIONS
◉ In class example: Buying the same pair of boots from Amazon or
Dillard's. Are they the same price? Answer: Would argue no. One you
can get immediately, the other you would have to wait to have
shipped. You could try on the boot in store to ensure the right size.
You would have to wait for an exchange if you ordered the wrong
size. Ordering online allows you to not have to make a trip to a store.
◉ What are some internal factors affecting price decisions? Answer:
- Marketing objectives
- Marketing mix strategies
- Costs
- Organizational considerations
◉ What are some external factors affecting price decisions? Answer:
- Nature of the market and demand
- Competition
- Other environmental factors (economy, government, resellers,
social concerns)
,◉ What are the marketing objectives that affect pricing decisions?
Answer: - Survival (low prices hoping to increase demand)
- Current Profit Maximization (choose the price that produces the
maximum current profit)
- Market Share Leadership (low as possible prices to become the
market share leader)
- Product Quality Leadership (high prices to cover higher
performance quality and R&D)
◉ What are the costs that affect price? Answer: - Fixed Costs
- Variable Costs
- Total Costs
◉ What are Fixed Costs? Answer: Costs that don't vary with sales or
production levels (Overhead)
◉ What are some examples of Fixed Costs? Answer: Executive
Salaries, Rent
◉ What are Variable Costs? Answer: Costs that do vary directly with
the level of production
◉ What is an example of Variable Costs? Answer: Raw Materials
,◉ What are total costs? Answer: The sum of the fixed and variable
costs for any given level of production.
◉ How should you price products in relation to costs? Answer: You
should price products greater than variable costs. If you set it below
total costs, you might be okay in the short run.
◉ What determines the price floor? Answer: Costs
◉ What determines the price ceiling? Answer: Customers
◉ What are some external factors that affect pricing decisions?
Answer: - Markets and demand
- Competitors' cost, prices, and offers
- Other external factors (economic conditions, reseller reactions,
government actions, and social concerns)
◉ What is a pure competition? Answer: Many buyers and sellers
who have little effect on the price
◉ What is an example of pure competition? Answer: Wheat
◉ What is monopolistic competition? Answer: Many buyers and
sellers who trade over a range of prices.
, ◉ What is an example of monopolistic competition? Answer: Jeans
◉ What is oligopolistic competition? Answer: Few sellers who are
sensitive to each other's pricing/marketing strategies
◉ What is an example of oligopolistic
competition? Answer: Airline industry
◉ What is a pure monopoly? Answer: a single seller
◉ What is an example of pure monopoly? Answer: Utility company
◉ Inelastic demand Answer: demand hardly changes with a small
change in price
◉ Elastic demand Answer: demand changes greatly with a small
change in price
◉ Which demand would marketers like more? Inelastic or Elastic
Answer: Inelastic demand because value is seen, not price
