BUS 360 Final Chps. 14-19 Exam Questions with Correct Answers Latest Update 2025/2026
price - Answers the overall sacrifice a consumer is willing to make (money, time, energy) to
acquire a specific product or service
5 Cs of Pricing - Answers company objectives, customers, costs, competition, channel members
profit orientation - Answers a company objective that can be implemented by focusing on target
profit pricing, maximizing profits, or target return pricing
target profit pricing - Answers a 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
maximizing profits - Answers a 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
target return pricing - Answers a 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
sales orientation - Answers a company objective based on the belief that increasing sales will
help the firm more than will increasing profits
premium pricing - Answers a 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 show for the best or for whom price does not matter
competitor orientation - Answers a company objective based on the premise that the firm
should measure itself primarily against its competition
competitive parity - Answers a firm's strategy of setting prices that are similar to those of major
competitors
status quo pricing - Answers a competitor-oriented strategy in which a firm changes prices only
to meet those of competition
customer orientation - Answers a company objective based on the premise that the firm should
measure itself primarily according to whether it meets its customers' needs
demand curve - Answers shows how many units of a product or service consumers will demand
during a specific period at different prices
prestige products or services - Answers products and services that consumers purchase for
,status rather than functionality
price elasticity of demand - Answers 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
elastic - Answers 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
inelastic - Answers 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
dynamic pricing - Answers refers to the process of charging different prices for goods or
services based on the type of customer, time of the day, week, or even season, and level of
demand. also called individualized pricing
income effect - Answers the change in the quantity of a product demanded by consumers due
to a change in their income
substitution effect - Answers consumers' ability to substitute other products for the focal brand,
thus increasing the price elasticity of demand for the focal brand
cross-price elasticity - Answers the percentage change in demand for product A that occurs in
response to a percentage change in price of product B
complementary products - Answers 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
substitute products - Answers 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
variable costs - Answers those costs, primarily labor and materials, that vary with production
volume
fixed costs - Answers those costs that remain essentially at the same level, regardless of any
changes in the volume of production
total cost - Answers the sum of the variable and fixed costs
break-even analysis - Answers 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
break-even point - Answers the point at which the number of units sold generates just enough
revenue to equal the total costs; at this point, profits are zero
, contribution per unit - Answers the price less the variable cost per unit. variable used to
determine the break-even point in units
monopoly - Answers one firm provides the product or service in a particular industry
oligopolistic competition - Answers competition that occurs when only a few firms dominate a
market
price war - Answers a situation (or competition) that occurs when two or more firms compete
primarily by lowering their prices
predatory pricing - Answers a 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
monopolistic competition - Answers 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
pure competition - Answers 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
retailers' cooperative - Answers a 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
ownership of, the cooperative's operations
pricing strategy - Answers a long-term approach to setting prices for the firm's products
everyday low pricing (EDLP) - Answers a strategy companies use to emphasize the continuity of
their retail prices at a level somewhere between the regular, nonsale price and the deep-
discount sale prices the competitors may offer
high/low pricing - Answers a pricing strategy that relies on the promotion of sales, during which
prices are temporarily reduced to encourage purchases
reference price - Answers the price against which buyers compare the actual selling price of the
product and that facilitates their evaluation process
penetration pricing strategy - Answers a new product or service pricing strategy in which the
initial price is set relatively low with the objective of building sales, market share, and profits
quickly and to deter competition from entering the market
experience curve effect - Answers the drop in unit cost as the accumulated volume sold
increases; as sales continue to grow, the costs continue to drop, allowing even further
price - Answers the overall sacrifice a consumer is willing to make (money, time, energy) to
acquire a specific product or service
5 Cs of Pricing - Answers company objectives, customers, costs, competition, channel members
profit orientation - Answers a company objective that can be implemented by focusing on target
profit pricing, maximizing profits, or target return pricing
target profit pricing - Answers a 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
maximizing profits - Answers a 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
target return pricing - Answers a 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
sales orientation - Answers a company objective based on the belief that increasing sales will
help the firm more than will increasing profits
premium pricing - Answers a 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 show for the best or for whom price does not matter
competitor orientation - Answers a company objective based on the premise that the firm
should measure itself primarily against its competition
competitive parity - Answers a firm's strategy of setting prices that are similar to those of major
competitors
status quo pricing - Answers a competitor-oriented strategy in which a firm changes prices only
to meet those of competition
customer orientation - Answers a company objective based on the premise that the firm should
measure itself primarily according to whether it meets its customers' needs
demand curve - Answers shows how many units of a product or service consumers will demand
during a specific period at different prices
prestige products or services - Answers products and services that consumers purchase for
,status rather than functionality
price elasticity of demand - Answers 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
elastic - Answers 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
inelastic - Answers 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
dynamic pricing - Answers refers to the process of charging different prices for goods or
services based on the type of customer, time of the day, week, or even season, and level of
demand. also called individualized pricing
income effect - Answers the change in the quantity of a product demanded by consumers due
to a change in their income
substitution effect - Answers consumers' ability to substitute other products for the focal brand,
thus increasing the price elasticity of demand for the focal brand
cross-price elasticity - Answers the percentage change in demand for product A that occurs in
response to a percentage change in price of product B
complementary products - Answers 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
substitute products - Answers 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
variable costs - Answers those costs, primarily labor and materials, that vary with production
volume
fixed costs - Answers those costs that remain essentially at the same level, regardless of any
changes in the volume of production
total cost - Answers the sum of the variable and fixed costs
break-even analysis - Answers 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
break-even point - Answers the point at which the number of units sold generates just enough
revenue to equal the total costs; at this point, profits are zero
, contribution per unit - Answers the price less the variable cost per unit. variable used to
determine the break-even point in units
monopoly - Answers one firm provides the product or service in a particular industry
oligopolistic competition - Answers competition that occurs when only a few firms dominate a
market
price war - Answers a situation (or competition) that occurs when two or more firms compete
primarily by lowering their prices
predatory pricing - Answers a 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
monopolistic competition - Answers 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
pure competition - Answers 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
retailers' cooperative - Answers a 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
ownership of, the cooperative's operations
pricing strategy - Answers a long-term approach to setting prices for the firm's products
everyday low pricing (EDLP) - Answers a strategy companies use to emphasize the continuity of
their retail prices at a level somewhere between the regular, nonsale price and the deep-
discount sale prices the competitors may offer
high/low pricing - Answers a pricing strategy that relies on the promotion of sales, during which
prices are temporarily reduced to encourage purchases
reference price - Answers the price against which buyers compare the actual selling price of the
product and that facilitates their evaluation process
penetration pricing strategy - Answers a new product or service pricing strategy in which the
initial price is set relatively low with the objective of building sales, market share, and profits
quickly and to deter competition from entering the market
experience curve effect - Answers the drop in unit cost as the accumulated volume sold
increases; as sales continue to grow, the costs continue to drop, allowing even further
