Multiple choice questions:
Question 1
Vac "N' Sew will give customers $100 for a used vacuum cleaner, regardless of condition, when they purchase a new vacuum or sewing machine. This essentially reduces the price by $100. What is this type of discount called?
Question 1 options:
a) functional discount
b) captive product discount
c) seasonal discount
d) trade-in allowance
e) by-product allowance
Question 2
With product bundle pricing, sellers can combine several products and offer the bundle ________.
Question 2 options:
a) as a working unit
b) at a reduced price
c) as a complete self-service package
d) as a reward to loyal customers
e) as segmented pricing
Question 3
________ refers to selling below cost with the intention of punishing a competitor or gaining higher long-run profits by putting competitors out of business.
Question 3 options:
a) Oligopolistic pricing
b) Captive pricing
c) Dynamic pricing
d) Zone pricing
e) Predatory pricing
Question 4
Qriosity Inc. comes out with a new antivirus program and prices it at half price to attract buyers. The company is using ________.
Question 4 options:
a) marketing-skimming pricing
b) market-penetration pricing
c) value-added pricing
d) reference pricing
e) promotional allowances
Question 5
A company sets not just a single price, but rather a ________ that covers different items in its line that change over time as products move through their life cycles.
Question 5 options:
a) pricing by-product
b) pricing structure
c) pricing loop
d) pricing cycle
e) pricing bundle
Question 6
The relationship between the price charged and the resulting demand level can be shown as the ________.
Question 6 options:
a) demand curve
b) supply curve
c) cost curve
d) break-even chart
e) inflation rate
Question 7
When a manufacturer offers a ________, customers buy products from manufacturers' dealers within a specified time period and the manufacturer sends the customer a check.
Question 7 options:
a) cash rebate
b) markup price
c) dealer reduction
d) flash sale
e) functional discount
Question 8
Rent, electricity, and executive salaries are examples of ________ costs.
Question 8 options:
a) fixed
b) variable
c) break-even
d) target
e) marketing
Question 9
________ prices are the prices that a buyer carries in his/her mind and refers to when looking at a given product.
Question 9 options:
a) Captive product
b) Reference
c) Promotional
d) Geographical
e) Dynamic
Question 10
________ pricing is the approach of setting a low initial price in order to attract a large number of buyers quickly and win a large market share.
Question 10 options:
a) Market-skimming
b) Market-penetration
c) Above-market
d) Value-based
e) Follow-the-leader
Question 11
Under ________, the market consists of a few large sellers who are highly sensitive to each other's pricing and marketing strategies.
Question 11 options:
a) pure competition
b) monopolistic competition
c) oligopolistic competition
d) a pure monopoly
e) pure monopsony
Question 12
Producers use captive product pricing to set the price of the main product ________ and set ________ on the supplies necessary to use the product.
Question 12 options:
a) low; low markups
b) high; low markups
c) low; high markups
d) high; high markups
e) moderately; moderate markups
Question 13
Which of the following is a reason for a company to raise its prices?
Question 13 options:
a) to address the issue of overdemand for a product
b) to win a larger share of the market
c) to use excess capacity
d) to boost sales volume
e) to balance out decreasing costs
Question 14
If Dell charges the same price for delivery of its product to any customer that is located within the Great Lakes states, the company is using ________.
Question 14 options:
a) psychological pricing
b) promotional pricing
c) reference pricing
d) zone pricing
e) uniform-delivered pricing
Question 15
Value-based pricing is the reverse process of ________ pricing.
Question 15 options:
a) variable cost-based
b) cost-plus
c) cost-based
d) good-value
e) equity value-based
Question 16
Consumers use price less to judge the quality of a product when they ________.
Question 16 options:
a) lack information
b) lack skills to use the product
c) have experience with the product
d) are shopping for a specialty item
e) cannot physically examine the product
Question 17
If demand hardly changes with a small change in price, we say the demand is ________.
Question 17 options:
a) variable
b) inelastic
c) value-based
d) at break-even pricing
e) penetrating the market
Question 18
What type of pricing is being used when a company temporarily prices its product below the list price or even below cost to create buying excitement and urgency?
Question 18 options:
a) segmented pricing
b) psychological pricing
c) reference pricing
d) promotional pricing
e) dynamic pricing
Question 19
Under ________, the market consists of many buyers and sellers trading in a uniform commodity such as wheat, copper, or financial securities.
Question 19 options:
a) pure competition
b) monopolistic competition
c) oligopolistic competition
d) a pure monopoly
e) pure monopsony
Question 20
Under which type of geographic pricing strategy does each customer pay the same price for the product from the factory to its destination?
Question 20 options:
a) basing-point pricing
b) freight-absorption pricing
c) FOB-origin pricing
d) dynamic pricing
e) uniform-delivered pricing
Question 21
________ pricing involves setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for the company's efforts and risks.
Question 21 options:
a) Value-based
b) Fixed cost
c) Cost-based
d) Variable cost
e) Cost-skimming
Question 22
________ uses buyers' perceptions of what a product is worth, not the seller's cost, as the key to pricing.
Question 22 options:
a) Customer value-based pricing
b) Target return pricing
c) Cost-based pricing
d) Equity-based pricing
e) Competition-based pricing
Question 23
With an understanding of price elasticity, sellers should know that the less elastic the demand for their product is, the more advantageous it is for them to ________.
Question 23 options:
a) drop the price
b) raise the price
c) leave the price where it is
d) discontinue the item
e) bundle the product with another product
Question 24
When Glow Gift Card Shop offers a price reduction to customers who buy Christmas cards the week after Christmas, it is giving a(n) ________ discount.
Question 24 options:
a) functional
b) seasonal
c) annual
d) allowance
e) credit
Question 25
If demand changes greatly with a small change in price, we say the demand is ________.
Question 25 options:
a) inelastic
b) variable
c) elastic
d) value-based
e) fixed
________________________________________
Question 26
Leonards, a leading French garment manufacturing company, is looking for ways to go global. Penny, a designer from California, wishes to open a fashion boutique in the neighborhood, and gain production expertise and name without having to invest significantly. She learns about Leonards' global expansion plans, and buys the right to use its manufacturing process for a royalty fee. This allows it to gain entry into a foreign market at little risk. Leonards has used the ________ method of entering a foreign market.
Question 26 options:
a) licensing
b) exporting
c) joint ownership
d) contract manufacturing
e) management contracting
Question 27
Which of the following is true of the Uruguay Round of the WTO?
Question 27 options:
a) The Uruguay Round promoted short-term global trade growth.
b) The Uruguay Round further reduced the world's remaining merchandise tariffs by 50 percent.
c) The Uruguay Round did not protect intellectual property.
d) The Uruguay Round toughened the international protection of copyrights and patents.
e) The Uruguay Round began in late 2001 and concluded in 2005.
Question 28
Lemon N' Honey is a juice manufacturing company in the U.S. It exports its products to Australia, licenses to China, has a joint ownership venture in France, and owns a subsidiary in Brazil. It will eventually create a(n) ________ to handle all its worldwide activities.
Question 28 options:
a) international division
b) truly global organization
c) value delivery network
d) export department
e) domestic division
Question 29
The difference between exporting and joint venturing is that joint venturing involves ________.
Question 29 options:
a) lesser risk
b) production of goods mainly in the home country
c) lesser changes in a company's product lines
d) association with a host country partner to sell abroad
e) lesser investment
Question 30
________ is a method of going global in which the company makes agreements with producers in the foreign market to produce its product or provide its service.
Question 30 options:
a) Contract manufacturing
b) Direct investment
c) Acquisition
d) Exporting
e) Management contracting
Question 31
Licensing is a type of ________.
Question 31 options:
a) contract manufacturing
b) Greenfield investment
c) direct investment
d) management contracting
e) joint venture
Question 32
A country in South America has large reserves of copper and tin. Mining forms the pillar of its economy. A major part of its revenue is generated from exporting these resources. This country is poor in many other ways. It is a good market for large equipment, tools and supplies, and trucks. Since there are many foreign residents in this country and a wealthy upper class, it is also a market for luxury goods. This country has a(n) ________ economy.
Question 32 options:
a) subsistence
b) raw material exporting
c) emerging
d) industrializing
e) industrial
Question 33
Regardless of how companies go about pricing their products, their foreign prices probably will be higher than their domestic prices for comparable products.
Question 33 options:
a) True
b) False
Question 34
Which of the following is a drawback of contract manufacturing?
Question 34 options:
a) The chances of quickly starting the process are very low.
b) There is decreased control over the manufacturing process.
c) The risks involved are relatively high.
d) There is little opportunity of forming a partnership.
e) The scope of buying out the local manufacturer is limited.
Question 35
Which of the following types of economies consumes most of its output and barters the rest for simple goods and services?
Question 35 options:
a) industrial economy
b) industrializing economy
c) subsistence economy
d) emerging economy
e) raw material exporting economy
Question 36
Which of the following is an advantage of management contracting?
Question 36 options:
a) Management contracting involves the least change in the company's product lines.
b) The company can set up its own operations simultaneously.
c) Management contracting is the simplest way to enter a foreign market.
d) Management contracting yields income from the beginning.
e) Management contracting gives the contracting firm an option to buy some shares in the managed company immediately.
Question 37
Which of the following is true of raw material exporting economies?
Question 37 options:
a) In raw material exporting economies, the vast majority of people engage in simple agriculture.
b) Raw material exporting economies typically create a new rich class.
c) Raw material exporting economies are major exporters of manufactured goods, services, and investment funds.
d) Raw material exporting economies are rich in one or more resources but poor in other ways.
e) Raw material exporting economies consume most of their output and barter the rest.
Question 38
________ means marketing a product in a foreign market without making any changes to the product.
Question 38 options:
a) Product adaptation
b) Straight product extension
c) Dual adaptation
d) Product invention
e) Communication adaptation
Question 39
Which of the following is true of free trade zones?
Question 39 options:
a) Free trade zones are groups of nations organized to work toward common goals in the regulation of international trade.
b) Free trade zones were replaced by the World Trade Organization.
c) Free trade zones mediate global trade disputes.
d) Free trade zones are established only among the United States, Mexico, and Canada.
e) Free trade zones are countries that barter their output for simple goods and services.
Question 40
Japan is a major exporter of manufactured goods, services, and investment funds. Japan also exports its goods to other types of economies for raw materials and semifinished goods. Japan has a(n) ________ economy.
Question 40 options:
a) industrializing
b) emerging
c) industrial
d) raw material exporting
e) subsistence
Question 41
________ involves the least change in the company's product lines, organization, investments, or mission.
Question 41 options:
a) Joint ownership
b) Exporting
c) Direct investment
d) Licensing
e) Contract manufacturing
Question 42
When selling to less-affluent consumers in developing countries, companies can overcome the price escalation problem by ________.
Question 42 options:
a) making better versions of their products with added features
b) standardizing their international prices
c) pricing at the same level across countries
d) introducing slow-moving products in emerging markets
e) making smaller versions of their products
Question 43
Which of the following is true of exporting?
Question 43 options:
a) Exporting is the most complex way to enter a foreign market.
b) Exporting usually offers more control over pricing.
c) Exporting typically requires products to be modified for the foreign market.
d) Exporting involves the least change in the company's product lines.
e) Exporting involves a huge investment.
Question 44
Communication adaptation is a global communication strategy of fully adapting advertising messages to international markets.
Question 44 options:
a) True
b) False
Question 45
________ are a type of operating unit under an international division that are responsible for their own sales and profits.
Question 45 options:
a) World product groups
b) Geographical organizations
c) International subsidiaries
d) Global organizations
e) Export departments
Question 46
Which of the following is an advantage of licensing?
Question 46 options:
a) Licensing is the most economical method of going global.
b) The firm has equal control over the licensee as it would over its own operations.
c) The licensee gains a name without having to start from scratch.
d) If the licensee is successful, the firm earns more profits than it would do on its own.
e) The firm does not have the risk of creating a future competitor in the form of the licensee once the contract ends.
Question 47
One of the disadvantages of adapted global marketing when compared to standardized global marketing is that ________.
Question 47 options:
a) adapted global marketing results in more costs
b) adapted global marketing produces a smaller market share
c) the returns are lesser
d) the strategies are not tailored to the needs of the target customers
e) products and marketing approaches remain the same worldwide
Question 48
Which of the following is a benefit of joint ownership?
Question 48 options:
a) The companies merge their complementary strengths to develop a global marketing opportunity.
b) Joint ownership is the simplest way to enter a foreign market.
c) The risks involved are lesser as compared to those in exporting.
d) The partners typically agree over investment, marketing, and other policies.
e) Joint ownership involves lesser change in the company's organization and investments as compared to other forms of joint venturing.
Question 49
Which of the following is true of a global firm?
Question 49 options:
a) A global firm typically operates from one country.
b) A global firm has lesser advantages than purely domestic competitors.
c) A global firm sees the world as many different markets.
d) A global firm maximizes the importance of national boundaries.
e) A global firm manufactures and markets goods wherever it can do the best job.
Question 50
Which of the following is an advantage of direct investment?
Question 50 options:
a) Direct investment involves lower risk as compared to joint venturing.
b) Direct investment involves the least change in the company's investments and mission.
c) The firm keeps full control over the investment.
d) Direct investment involves minimum investment.
e) There is no risk of devalued or restricted currency.