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Exam 13: Building the Price Foundation

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Question 21

Multiple Choice

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The competitive market situation in which one seller sets the price for a unique product is referred to as

A) pure monopoly.
B) oligopoly.
C) monopolistic competition.
D) pure competition.
E) monopolistic oligopoly.

F) A) and B)
G) C) and E)

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Question 22

Multiple Choice

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The vertical axis of a demand curve graph represents

A) market growth rate.
B) relative market share.
C) price per unit.
D) potential profit in dollars.
E) quantity demanded.

F) A) and C)
G) C) and E)

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Question 23

Multiple Choice

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An online movie streaming service charges $14.99 per month for its basic package. However, when a competitor introduced the same service at $13.99, the firm dropped its price to $13.99. The firm most likely made this price reduction in an attempt to

Acme Shoe Co. sells heel replacement kits for men's shoes. It has fixed costs of $9 million and unit variable costs of $5 per pair. Acme is considering a switch from manual labor to an automated process. New equipment would cost an additional $4 million per year while lowering variable costs by $3 per shoe repair kit. How many kits would Acme have to sell at $17 per pair to make $2 million in profit in the next year with the automated process?

All of the following are examples of pricing constraints except

The marketplace sets the price for wheat, so farmers who are trying to sell their wheat crops don't have to create a pricing strategy. The wheat is sold in __________ type of competitive market.

According to the price equation, final price equals list price minus __________ plus extra fees.

Barter is the practice of exchanging products and services for other products and services rather than for

Tim Marlow, the owner of The Clock Works, wanted to know how many clocks he must sell in order to cover his fixed cost at a given price. Marloq knew that he had total fixed costs of $20,000 for equipment, taxes, and a bank loan. He also had a unit variable cost of $20 per clock for labor and materials. If the price Marlow charges for each of his clocks is $40, what is his break-even point quantity?

Jane Westerlund owns a picture-framing store, The Caplow Co. The average price she receives for a framed picture is $120. This price must cover her costs for a typical framed picture, which consists of $5 for glass, $2 for matting, $13 for the frame, and $30 for the labor involved. She must also cover monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising, and $3,500 for her salary. Assuming there is no change in price or the quantity demanded, if Westerlund wants to increase her advertising expenses to a total of $1,000 (a $500 increase) , this would cause total costs to __________ and the break-even quantity to __________.

All of the following are synonyms for price except

When Pizza Hut announced it was going to add 25 percent more toppings to its Meat Lover's line of pizzas without increasing prices, what consumer motivation was it appealing to?

Market share is the ratio of the __________ to those of the industry, including the firm itself.

Barter refers to

Suppose you are the owner of a picture frame store and you wish to calculate how many frames you must sell to cover your fixed and variable costs at a given price. Let's assume that the demand for your frames is strong, so the average price customers are willing to pay for each picture frame is $120. Also, suppose your fixed costs (FC) total $32,000 (real estate taxes, interest on a bank loan, etc.) and unit variable cost (UVC) for a picture frame is $50 (labor, glass, frame, and matting) . If your picture frame store sold 2,000 picture frames, what would your profit (or loss) be?

Selecting an approximate price level would occur during __________ of the price-setting process.

Describe a profit objective used by many Japanese manufacturing firms.

A primary reason for Washburn Guitars' success is

A reference value

The total money received from the sale of a product is referred to as