Objective 13.1
1) Companies should only produce and sell units as long as ________.
A) there is customer demand for the product
B) the competition allows it
C) the revenue from an additional unit exceeds the cost of producing it
D) there is a generous supply of low-cost direct materials
2) Too high a price may ________.
A) deter a customer from purchasing a product
B) increase demand for the product
C) indicate supply is too plentiful
D) decrease a competitor’s market share
3) Companies must always examine their pricing ________.
A) based on the supply of the product
B) based on the cost of producing the product
C) through the eyes of their customers
D) through the eyes of their competitors
4) Which of the following statements is true about the factors that affect pricing decisions?
A) Information about competitors’ technologies is not useful for pricing decisions.
B) Information about a competitor in a perfect market affects pricing decisions.
C) Increase in price of a substitute product does not affect pricing decisions.
D) Fluctuations in exchange rates between different countries’ currencies affect pricing decisions.
5) In a perfectly competitive market, which of the following is a primary factor influencing pricing decisions?
A) cost of production
B) availability of raw materials in the market
C) information on competitor’s cost structure
D) value customers place on product
6) Which of the following statements is true of the cost of producing a product?
A) It controls pricing in highly competitive markets.
B) It affects the willingness of a company to supply a product.
C) It includes manufacturing costs, but not product design costs for pricing decisions.
D) It is not a factor to be taken into account while pricing a product.
7) In a noncompetitive environment, the key factor affecting pricing decisions is the ________.
A) customer’s willingness to pay
B) price charged for alternative products
C) information on competitor’s cost structure
D) minimum price acceptable to the firm
8) Which of the following statements is true of costs and pricing decisions?
A) Companies get profit from selling products only when they are the price makers.
B) Companies supply products as long as the price the customer is willing to pay for its products exceeds the price that is charged by the competitor.
C) Companies supply products as long as there is a demand for the product in the market regardless of the price at which the products are sold.
D) Companies supply products as long as the revenues from selling the additional units exceed the cost of producing them.
9) Three major influences on pricing decisions are ________.
A) competition, costs, and customers
B) competition, demand, and production efficiency
C) continuous improvement, customer satisfaction, and supply
D) variable costs, fixed costs, and mixed costs
10) Companies must always examine pricing decisions through the eyes of their creditors.
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