HFT 4502 Test #3 Questions with Correct Answers Latest Update 2025/2026
Test Question: Cost? - Answers 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? - Answers
Downward sloping
Test Question: break even = - Answers fixed costs/ contribution margin
Test Question: Contribution Margin = - Answers sale price - fixed costs
Test Question: Competition based pricing is also referred to as? - Answers going rate pricing
Test Question: Competition based pricing ignores what? - Answers customer perceptions in the
market place
Price - Answers 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 - Answers the percent change in demand resulting from a given change in price
Perfectly Inelastic - Answers When price goes up, no change in quantity demanded occurs.
(Nothing is perfectly inelastic but gas and healthcare are the closest examples)
Perfectly Elastic - Answers When price goes up, quantity demanded drops to zero
Effects on total revenue on price increases and decreases due to inelasticity and elasticity... -
Answers inelastic: $ rises, TR rises
$ falls, TR falls
elastic: $ rises, TR falls
$ falls, TR rises
Cost-plus pricing - Answers adding a standard markup to the cost of the product
Value-based pricing - Answers pricing based on perceived value of the offering and one must
understand the value a segment places on the product
Competition-based pricing - Answers watch competitors rather than costs/demands, represents
collective wisdom, avoids price wars
Price Discrimination - Answers 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 - Answers 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 - Answers Temporary reduction of price to below list or cost
Upstream Partners - Answers are firms that supply what is needed to create a product or
service. (raw materials)
Downstream Partners - Answers connect the firm with its customers
The supply chain consists of? - Answers upstream and downstream partners
Distribution Channels - Answers A set of independent organizations involved in the process of
making a product or service available to the end user
Supply Chain - Answers is a value delivery network where all parties partner with each other to
improve the performance of the entire system
Channel Level - Answers any entity that helps bring the product closer to the final buyer
Marketing Intermediaries - Answers Travel agents and Tour wholesalers
Specialist intermediaries - Answers Tour brokers- sell motor coach tours,
motivational houses- provide incentive travel offers to firms who want to reward employee
distributor performance
Consortia - Answers A group of hospitality organizations allied together for marketing purposes
Vertical marketing systems - Answers producers, retailers and wholesalers acting as a unified
system
3 types of vertical marketing systems - Answers Administered VMS: size and power of channel
members
Corporate VMS: common ownership
Contractual VMS: contracts (franchising and alliances)
Alliances - Answers are designed to allow two organizations to benefit from each others
strengths
(ex. rest. and hotels)
Broker - Answers a wholesaler who does not take title to goods and whose function is to bring
Test Question: Cost? - Answers 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? - Answers
Downward sloping
Test Question: break even = - Answers fixed costs/ contribution margin
Test Question: Contribution Margin = - Answers sale price - fixed costs
Test Question: Competition based pricing is also referred to as? - Answers going rate pricing
Test Question: Competition based pricing ignores what? - Answers customer perceptions in the
market place
Price - Answers 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 - Answers the percent change in demand resulting from a given change in price
Perfectly Inelastic - Answers When price goes up, no change in quantity demanded occurs.
(Nothing is perfectly inelastic but gas and healthcare are the closest examples)
Perfectly Elastic - Answers When price goes up, quantity demanded drops to zero
Effects on total revenue on price increases and decreases due to inelasticity and elasticity... -
Answers inelastic: $ rises, TR rises
$ falls, TR falls
elastic: $ rises, TR falls
$ falls, TR rises
Cost-plus pricing - Answers adding a standard markup to the cost of the product
Value-based pricing - Answers pricing based on perceived value of the offering and one must
understand the value a segment places on the product
Competition-based pricing - Answers watch competitors rather than costs/demands, represents
collective wisdom, avoids price wars
Price Discrimination - Answers 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 - Answers 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 - Answers Temporary reduction of price to below list or cost
Upstream Partners - Answers are firms that supply what is needed to create a product or
service. (raw materials)
Downstream Partners - Answers connect the firm with its customers
The supply chain consists of? - Answers upstream and downstream partners
Distribution Channels - Answers A set of independent organizations involved in the process of
making a product or service available to the end user
Supply Chain - Answers is a value delivery network where all parties partner with each other to
improve the performance of the entire system
Channel Level - Answers any entity that helps bring the product closer to the final buyer
Marketing Intermediaries - Answers Travel agents and Tour wholesalers
Specialist intermediaries - Answers Tour brokers- sell motor coach tours,
motivational houses- provide incentive travel offers to firms who want to reward employee
distributor performance
Consortia - Answers A group of hospitality organizations allied together for marketing purposes
Vertical marketing systems - Answers producers, retailers and wholesalers acting as a unified
system
3 types of vertical marketing systems - Answers Administered VMS: size and power of channel
members
Corporate VMS: common ownership
Contractual VMS: contracts (franchising and alliances)
Alliances - Answers are designed to allow two organizations to benefit from each others
strengths
(ex. rest. and hotels)
Broker - Answers a wholesaler who does not take title to goods and whose function is to bring
