#1
Which of the following is an example of a market force?
Consumer preferences
ExplanationConsumer preferences drive market dynamics.
#2
What is a pricing strategy often used to quickly gain market share?
Penetration pricing
ExplanationPenetration pricing aims to rapidly capture market share by setting low prices.
#3
Which of the following is NOT a factor affecting pricing decisions?
Marketing budget
ExplanationMarketing budget is not directly related to pricing decisions.
#4
What pricing strategy involves setting a low initial price to attract customers, with the intention of raising it later?
Price skimming
ExplanationPrice skimming begins with high prices and gradually decreases.
#5
What is the primary goal of dynamic pricing?
To maximize revenue
ExplanationDynamic pricing adjusts prices to optimize revenue.
#6
Which of the following is an example of a non-price competition strategy?
Product differentiation
ExplanationProduct differentiation focuses on unique product features rather than price.
#7
Which of the following is a characteristic of a price-taker?
Operates in perfect competition
ExplanationPrice-takers are prevalent in perfect competition where they accept prevailing market prices.
#8
What is the term for a pricing strategy where the price is set based on the perceived value to the customer?
Value-based pricing
ExplanationValue-based pricing aligns prices with perceived customer value.
#9
In which market structure do firms have the least control over pricing?
Perfect competition
ExplanationPerfect competition offers no room for individual firms to influence prices.
#10
What is the term for the maximum price a customer is willing to pay for a product or service?
Reservation price
ExplanationReservation price denotes the highest price a consumer is willing to pay.
#11
Which of the following is NOT a common objective of pricing strategies?
Minimizing customer satisfaction
ExplanationPricing strategies aim to enhance, not diminish, customer satisfaction.
#12
What is a disadvantage of using a cost-plus pricing strategy?
It ignores competitor pricing
ExplanationCost-plus pricing overlooks competitor pricing dynamics.
#13
What effect would an increase in demand have on equilibrium price and quantity in a competitive market?
Price and quantity both increase
ExplanationIncreased demand leads to higher equilibrium price and quantity in competitive markets.
#14
What pricing strategy involves setting prices slightly below whole-dollar amounts?
Odd pricing
ExplanationOdd pricing sets prices slightly lower than round numbers for psychological appeal.