Managerial Economics Questions

Variable costs vary directly with the volume of sales and production, increasing as volume increases and decreasing as volume decreases.

According to the text, _______________ pricing suggests setting the price based on the competitor's price.a.) skimmingb.) penetrationc.) verticald.) price parity

Which of the following is NOT a disadvantage of cost-plus pricing?a.) Profit limitationsb.) Defensibility c.) Inappropriate treatment of fixed costsd.) Arbitrary overhead allocations

Which of the following is NOT an appropriate condition in which a firm can offer high customer value superior to competitors?a.) price-inelastic marketb.) desire to deter competitorsc.) deep pockets to absorb initially low profit marginsd.) sufficient capacity to fulfill increased demand

All of the following are major strategic options for developing market strategy EXCEPT:a.) introduce a fighting brand b.) increase volume and/or market sharec.) maximize profitsd.) maximize cash flow

All of the following are mentioned in the text as disadvantages of cost-plus pricing systems EXCEPT:a.) Implicit limits on growth and profit potential.b.) Arbitrary cost measurement.c.) Prices are not matched to market realities.d.) Difficult to implement this pricing system

All of the following are advantages of cost-plus pricing EXCEPT:a.) profitabilityb.) simplicity c.) defensibilityd.) all selections are advantages of cost-plus pricing

Which of the following methods of measuring customer value compares each options with the others? Then for each pair of option, customers would say which they prefer and how much extra they would pay.a.) direct value assessmentb.) perceived value analysisc.) price experimentd.) dollarmetric method

For manufactured products, ____________ usually include raw materials, utilities to power production machines, direct labor, and sales commissions.a.) fixed costsb.) marginal costsc.) variable costsd.) segmented costs

According to the text, a _______________ demand curve occurs when volume is relatively insensitive to changes in price.a.) price-elasticb.) price-inelasticc.) positive-slopingd.) negative-sloping

The customer value map displays the ______________ positions.a.) benefits/valueb.) price/costc.) value/priced.) cost/price

A firm is determining the price of a new product and uses a mark-up of 50%. If direct out-of-pocket cost is $50,000 and fully loaded manufacturing cost is $150,000, what price should be suggested if the firm uses cost-plus pricing?a.) $75,000b.) $150,000c.) $200,000d.) $225,000

All of the following are examples of fixed costs EXCEPT:a.) Managerial salariesb.) Depreciationc.) Administrative expensesd.) Raw materials

____________ include overhead and allocated items like depreciation, rent, salaries, and selling, general and administrative expenses.e.) Fixed costsf.) Marginal costsg.) Variable costsh.) Segmented costs

_____________ proceeds by identifying product costs, then adding a predetermined profit margin.a.) Conjoint pricingb.) Cost-plus pricingc.) Competitive pricingd.) Comparative pricing

_______________ is a method of estimating the price equivalence of the firm's versus competitive products.a.) Perceived value analysisb.) Conjoint analysisc.) Value-in-use analysisd.) Perceptual mapping

The formula for price elasticity of demand is percentage change in price/percentage change in demand.

In which of the following pricing strategies does the firm provide significant customer value by setting prices close to costs?a.) partity pricingb.) vertical pricingc.) penetration pricingd.) skim pricing

According to the text, which of the following strategies is the most-used pricing method?a.) Conjoint pricingb.) Cost-plus pricingc.) Competitive pricingd.) Comparative pricing

Which of the following specific methodologies is NOT mentioned in the text as being available for measuring perceived value?a.) Direct value assessmentb.) Perceived value analysisc.) The dollarmetric methodd.) Factor analysis