MGT 103 Quiz 3 (ch. 13-16) UPDATED
ACTUAL Questions and CORRECT
Answers
importance of price to marketers - CORRECT ANSWER - only variable that can be
changed quickly; related to total revenue and profit
price - CORRECT ANSWER - the assignment of value, or the amount the consumer must
exchange to receive the offering
profit formula - CORRECT ANSWER - total revenue - total costs OR (price x quantity
sold) - total costs
understanding demand - CORRECT ANSWER - for most products, there is an inverse
relationship between price and demand
inelastic demand - CORRECT ANSWER - a change in price results in a little or no change
in quantity demanded
elastic demand - CORRECT ANSWER - a change in price causes a great (opposite)
change in quantity demanded
types of costs - CORRECT ANSWER - fixed costs and variable costs
fixed costs - CORRECT ANSWER - expenses that do not vary as a function of output
volume (even if no production activity, these remain); rent, mortgage payment, insurance,
computers, salary of full-time workers, advertising
, variable costs - CORRECT ANSWER - expenses that fluctuate in direct proportion to the
output volume of units produced; cost of raw materials, credit card fees, piece rate labor, sales
commissions, delivery expenses
break-even point - CORRECT ANSWER - the point at which the costs of producing a
product equal the revenue made from selling the product
breakeven point (quantity) formula - CORRECT ANSWER - fixed costs/per-unit
contribution to fixed costs (price-variable costs)
contribution unit margin - CORRECT ANSWER - price - variable costs
contribution margin - CORRECT ANSWER - difference between total revenue and total
variable costs
importance of price depends on... - CORRECT ANSWER - type of product, type of target
market, purchase situation
Value combines a product's price and quality attributes - CORRECT ANSWER -
customers use value to differentiate between competing brands
pricing strategies - CORRECT ANSWER - Cost based, competitor based, demand based
cost based pricing - CORRECT ANSWER - calculate price based on company's costs.
Markup can be stated as a percentage of cost of making the product or a percentage of selling
price
competitive based pricing - CORRECT ANSWER - benchmarking on competitor's prices
demand based pricing - CORRECT ANSWER - setting a price based on what consumers
are willing to pay
ACTUAL Questions and CORRECT
Answers
importance of price to marketers - CORRECT ANSWER - only variable that can be
changed quickly; related to total revenue and profit
price - CORRECT ANSWER - the assignment of value, or the amount the consumer must
exchange to receive the offering
profit formula - CORRECT ANSWER - total revenue - total costs OR (price x quantity
sold) - total costs
understanding demand - CORRECT ANSWER - for most products, there is an inverse
relationship between price and demand
inelastic demand - CORRECT ANSWER - a change in price results in a little or no change
in quantity demanded
elastic demand - CORRECT ANSWER - a change in price causes a great (opposite)
change in quantity demanded
types of costs - CORRECT ANSWER - fixed costs and variable costs
fixed costs - CORRECT ANSWER - expenses that do not vary as a function of output
volume (even if no production activity, these remain); rent, mortgage payment, insurance,
computers, salary of full-time workers, advertising
, variable costs - CORRECT ANSWER - expenses that fluctuate in direct proportion to the
output volume of units produced; cost of raw materials, credit card fees, piece rate labor, sales
commissions, delivery expenses
break-even point - CORRECT ANSWER - the point at which the costs of producing a
product equal the revenue made from selling the product
breakeven point (quantity) formula - CORRECT ANSWER - fixed costs/per-unit
contribution to fixed costs (price-variable costs)
contribution unit margin - CORRECT ANSWER - price - variable costs
contribution margin - CORRECT ANSWER - difference between total revenue and total
variable costs
importance of price depends on... - CORRECT ANSWER - type of product, type of target
market, purchase situation
Value combines a product's price and quality attributes - CORRECT ANSWER -
customers use value to differentiate between competing brands
pricing strategies - CORRECT ANSWER - Cost based, competitor based, demand based
cost based pricing - CORRECT ANSWER - calculate price based on company's costs.
Markup can be stated as a percentage of cost of making the product or a percentage of selling
price
competitive based pricing - CORRECT ANSWER - benchmarking on competitor's prices
demand based pricing - CORRECT ANSWER - setting a price based on what consumers
are willing to pay
