THINK Marketing 3rd Edition By Keith J. Tuckwell – Test Bank

Chapter 11 Pricing Decisions: Objectives, Strategies and Tactics

1) Price is defined as the exchange value of a good or service; value is defined solely by the tangible benefits the purchaser derives.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 233
Skill: Recall
LO: 1

2) Walmart relies on price to establish and maintain its image.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 234
Skill: Applied
LO: 1

3) The basic law of supply and demand contends that an abundant supply and a low demand lead to a high price, while high demand and limited supply lead to a low price.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 235
Skill: Recall
LO: 2

4) The effects of a price change on volume demanded must be factored into a pricing strategy.
Answer: TRUE
Diff: 1 Type: TF Page Ref: 235
Skill: Recall
LO: 2

5) The purchase of automobile fuel is an example of elastic demand.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 235
Skill: Applied
LO: 2

6) A price increase for a Rolex watch is an example of inelastic demand.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 235
Skill: Applied
LO: 2

7) If prices increased 10% and demand remained stable, demand would be inelastic.
Answer: TRUE
Diff: 1 Type: TF Page Ref: 235
Skill: Applied
LO: 2

8) Reducing the size of a bag of chips is an example of the cost reduction principle.
Answer: TRUE
Diff: 1 Type: TF Page Ref: 237
Skill: Applied
LO: 2

9) In a rising cost environment, rather than increase price the organization could search for and implement cost reductions.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 237
Skill: Recall
LO: 2

10) A firm that uses “equal to competition” position in the marketplace adopts a conservative position because it does not want to be caught in a price war.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 242
Skill: Recall
LO: 4

11) Increasing sales volume and market share are objectives of profit maximization.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 239
Skill: Recall
LO: 4
12) “To increase market share from 5% to 8%” is an example of a profit maximization objective.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 239
Skill: Applied
LO: 4