Chapter 13—Designing Pricing Strategies and Programs True/False Questions 1. Price is the only element of the marketing mix to produce revenue. True (moderate) p. 245 2. Price is one of the least flexible elements in the marketing mix. False (easy) p. 245 3. If a firm chooses the objective of current profit maximization, it essentially is ignoring the effect of

other elements of the marketing mix. True (moderate) p. 246 4. Nonprofits and public organizations may seek only partial cost recovery, rather than some profit

level. True (easy) p. 247 5. Fixed costs are costs that do not vary with production or sales revenue. True (easy) p. 248 6. The CEO’s salary is an example of a variable cost. False (moderate) p. 248 7. Consumers are likely to be more price sensitive when the cost is being borne by another party, and

when the product cannot be stored. False (moderate) p. 247 8. When a manufacturer varies its cost as a function of its differentiated marketing offers, the

manufacturer needs to use activity-based accounting. True (difficult) p. 250 9. Target costing focuses on trying to engineer costs before a new product has been introduced. True

(moderate) p. 250 10. One way of estimating the demand curve for your product is simply ask consumers how many units

they would buy at different proposed prices. True (moderate) p. 247 11. A decline in average production costs as the firm accumulates more experience is called the learning

curve. True (moderate) p. 249 12. Target costing requires determining the price consumers will pay before producing the good or

service. True (moderate) p. 250 13. Going-rate pricing is especially popular if costs are difficult to measure or competitive response is

certain. False (moderate) p. 253 14. A company that sells bottled water at a premium price is using a markup pricing strategy. False

(moderate) p. 250 15. In going-rate pricing, the firm bases its price largely on competitors’ prices. True (easy) p. 253 16. Retailers that employ everyday low pricing do not run price promotions. False (difficult) p. 253 17. Psychological pricing methods give groups of buyers a deal when they combine their orders. False

(moderate) p. 255 18. A shoe store that carries pumps at $32, $52, and $82, and no other prices, is engaged in product-line

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pricing. True (moderate) p. 260 19. When Toyota offers an Echo model that includes air, automatic transmission, a CD player, and

custom paint at a price below what the individual options would be priced at, it is an example of product-bundle pricing. True (moderate) p. 260

Multiple Choice Questions 20. A common mistake in pricing is _______________.

a.) setting prices according to demandb.) revising prices too oftenc.) considering price and price competition as a key problem in marketingd.) ignoring costs when setting pricese.) setting prices independently of the rest of the marketing mix (difficult) p. 245

21. Scotty is in the process of opening Suburban Legends SK8S to sell boards, wheels, trucks, clothing,

videos, and skateboarding related collectibles. The first thing Scotty should do when setting the store’s prices is to _______________.a.) determine demandb.) estimate costsc.) determine her target marketd.) select a pricing methode.) select a pricing objective (moderate) p. 245

22. A _______________ pricing objective is suitable for a company that has overcapacity, intense

competition, and changing customer needs.a.) maximum current profitb.) survival (moderate) p. 245c.) maximum current revenued.) maximum sales growthe.) partial cost recovery

23. Which of the following is not a common mistake in handling the pricing P?

a.) reliance on committee decisions about pricing (moderate) p. 245b.) too cost-orientedc.) not revised often enough to reflect market opportunitiesd.) set independently of other marketing mix variablese.) not varied enough

24. The introduction of a new product to the market using market-penetration pricing is most likely to be

successful when _______________.a.) the unit costs of producing a small volume of the product are highb.) there must be no existing demand for the productc.) the market is highly price sensitive (difficult) p. 246d.) the high price communicates nothing to the potential buyerse.) competitors are not attracted to the market because there is no profit motivation

25. When introduced in the late 1970s, personal computers had large initial demand. People were

interested in buying them to make writing and editing easier. The earliest simple PCs were initially priced at around $2,500. The manufacturers of the first calculator were probably using a _______________ pricing strategy.

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a.) cost-orientedb.) market-skimming (moderate) p. 246c.) value-orientedd.) market-penetratione.) product-quality leadership

26. A market segment has a large number of buyers. High initial price does not attract competitors to the

market, but it communicates superior product image. In this segment a _______________ is the best strategy.a.) market-skimming pricing (difficult) p. 246b.) product quality leadershipc.) maximum current revenued.) market-penetration pricinge.) maximum sales growth

27. In 1991, Taco Bell began offering a 59-79-99 cents pricing strategy for its Mexican-themed fast food.

It did this by eliminating kitchens and having workers assemble food rather than cook it. Its costs fell as it became more efficient, and the 59-79-99 pricing allowed to Taco Bell to take market share from leaders McDonalds and Burger King. Taco Bell was using a _______________ pricing strategy.a.) market-skimming b.) product quality leadershipc.) maximum current revenued.) market-penetration (moderate) p. 246e.) maximum sales growth

28. Buyers are more price sensitive when _______________.

a.) the product is significantly more distinctive than others on the marketb.) the expenditure is a small part of the total cost of the end productc.) they are more aware of substitutes for the product (difficult) p. 247d.) they cannot easily compare the quality of substitutes for the producte.) the product is perceived to have more quality than others on the market

29. Demand is likely to be price elastic if _______________.

a.) there are many alternatives and direct substitutes for the product (difficult) p. 248b.) buyers do not readily notice price changesc.) buyers are slow to change their purchasing habitsd.) buyers think a higher price is justified by quality differencese.) the buyers can use normal inflation to explain the price increase

30. _______________ are costs that do not vary with production or sales revenue.

a.) Total costsb.) Average costsc.) Variable costsd.) Fixed costs (easy) p. 248e.) Marginal costs

31. Which of the following is an example of a fixed cost?

a.) a salesperson’s commissionb.) the portion of your phone bill that does not include long distance charges (moderate) p. 248c.) delivery costs of a 3-ton refrigeration unit to Kennesaw, Georgia, and another one to Jacksonville,

Florida

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d.) cost of the hiring process to employ a new vice-president of legale.) extra employees brought in to handle the holiday rush

32. Which of the following is an example of a fixed cost?

a.) the CEO’s bonusb.) occasional charitable expenses donated by the firmc.) mall rent based on percentage of salesd.) monthly $2,000 payment on loan to buy earthmoving equipment (moderate) p. 248e.) employees’ regular salaries as dictated by the union contract

33. _______________ consist of the sum of the fixed and variable costs for any given level of

production.a.) Total costs (easy) p. 248b.) Average costsc.) Variable Costsd.) Fixed Costse.) Marginal Costs

34. Every time Nike doubles the total number of shoes it has sold, its marketing cost structure falls by a

predictable percentage. This is an example of the _______________.a.) leverage effectb.) activity-based pricing conceptc.) experience curve (moderate) p. 249d.) elasticity consumer exhibit for shoe pricese.) target costing principle

35. Which of the following statements describes one of the risks inherent with experience-curve pricing

strategy?a.) The aggressive pricing associated with this strategy might give the product a cheap image.

(difficult) p. 249b.) This strategy is an offensive strategy against strong competitors that typically respond quickly to

its implementation.c.) The strategy assumes competitors will respond with an even lower price.d.) The strategy leads to expensive innovation, which might not payoff in the long run.e.) The strategy is most efficient in industries where there is little growth potential.

36. When a manufacturer varies its cost as a function of its differentiated marketing offers, the

manufacturer needs to use _______________ accounting.a.) standard costb.) value-addedc.) LIFOd.) FIFOe.) activity-based (moderate) p. 250

37. When a firm is analyzing competitors in order to set its own prices, it needs to _______________.

a.) select its pricing method prior to that analysisb.) benchmark its own costs against competitors (difficult) p. 250c.) never set its price to be the same as its competitorsd.) know the benefits its target market wantse.) assume its competitors will not change their prices

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38. A maker of generic skateboard decks (blanks) for shops to customize incurs a variable cost of $12 per blank and fixed costs of $500,000. To earn a 20 percent markup on selling price, the manufacturer would charge _______________ for each of the 100,000 blanks it expects to sell.a.) $14.40b.) $20.40c.) $21.25 (difficult) pp. 250-251d.) $37.50e.) $33.33

39. Lucinda is a maker of wine charms (small, decorative jewelry loops put on wineglass stems to

set your glass apart from those of other partiers), and has a variable cost of $4.50 per set of six and fixed costs of $16,000. To earn a 25 percent markup on selling price, Lucinda should charge _______________ for each of the 4,000 sets of charms she expects to sell.a.) $5.63b.) $6.38c.) $8.63d.) $9.63e.) $11.33 (difficult) pp. 250-251

40. Jane Yellowhair makes small woolen handbags out of Pendleton blankets, and has fixed costs of

$30,000. She expects to sell 6,000 bags for $17.50. This price will give her a 20 percent markup. Calculate the variable costs.a.) $5.00b.) $6.00c.) $8.50d.) $9.00 (moderate) pp. 250-251e.) $10.00

41. Markup pricing is popular because _______________.

a.) sellers can determine demand more easily than they can determine costsb.) it motivates manufacturing to find ways to cut costsc.) it works especially well with product positioning strategiesd.) it considers the effects of current demand, perceived value, and competition on pricee.) many people feel cost-plus pricing is fairer to both buyers and sellers (difficult) p. 251

42. If an entrepreneur commits to her venture capitalists a goal of earning a 30 percent return on equity, it

would most likely use a _______________ pricing approach to setting price.a.) markupb.) psychologicalc.) target-return (moderate) pp. 251-252d.) going-ratee.) perceived-value

43. Burlingvale Coats produces winter wear for Target. Their recently designed parkas for the

northern stores cost about $30 to produce, and Burlingvale wishes to earn a 15 percent return on an investment of $5 million. If 75,000 parkas will be sold to Target, the appropriate price per item is _______________.a.) $30.00b.) $37.50c.) $35.00d.) $40.00 (moderate) pp. 251-252

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e.) $45.00 44. Nixon Watch Co. (www.nixonnow.com) will incur fixed costs of $500,000 and unit variable costs

of $20 on its new perpetual calendar quartz model. Nixon plans to price the model at $50. To break even, Nixon must sell _______________ units.a.) 9,876b.) 16,667 (moderate) p. 252c.) 18,333d.) 20,000e.) 25,000

45. SunCrest Gardening Supply Company wants to sell a polystyrene window planter for $30. Its

variable costs for each planter are $12. To break even, SunCrest needs to sell 500 planters. Calculate SunCrest’s fixed costs.a.) $1,667b.) $3,600c.) $6,000d.) $9,000 (moderate) p. 252e.) $15,000

46. The price setting method most closely corresponding to the concept of product positioning is

_______________ pricing.a.) markupb.) psychologicalc.) going-rated.) target-returne.) perceived-value (easy) p. 253

47. A company that sells bottled water at a premium price is using a _______________ pricing strategy.

a.) markupb.) target-returnc.) perceived-value (moderate) p. 253d.) going-ratee.) demographic

48. _______________ pricing is a method in which the company charges a fairly low price for a high-

quality offering.a.) Markupb.) Psychologicalc.) Target-returnd.) Perceived-valuee.) Value (easy) p. 253

49. When a wireless company advertises a low list price that includes free roaming, free weekends,

and free long distance as additions to the regular 400 monthly minutes for $35, it is using a _______________ pricing strategy.a.) markupb.) psychologicalc.) target-returnd.) perceived-valuee.) value (moderate) p. 253

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50. Wal-Mart does not do frequent price-related promotions in favor of keeping the prices as low as

possible all the time—this is even reflected in their television advertising. This is an example of ____________ pricing.a.) everyday low (easy) p. 253b.) high-low c.) going-rate d.) auction-typee.) value

51. In _______________ pricing, the firm bases its price largely on competitors’ prices.

a.) valueb.) target-returnc.) going-rate (moderate) p. 253d.) perceived-valuee.) geographical

52. Baskin Robbins in Jackson Hole, Wyoming sells single-dip ice cream cones priced at roughly the

same price as single-dips at the Coldstone Creamery and Monk’s ice cream sellers downtown. This information indicates that the Baskin Robbins store uses _______________ pricing.a.) valueb.) target-returnc.) going-rate (moderate) p. 253d.) perceived-valuee.) geographical

53. When customers buy on the basis of a reference price or because the price conveys a particular

quality image to them, they are being influenced by _______________.a.) value pricingb.) the psychology of pricing (moderate) p. 255c.) the going-rates of competitorsd.) value augmented by perceptione.) an aggregated marketing plan for pricing

54. According to the research of Farris and Reibstein, how does the marketing mix influence a product’s

price?a.) For products with high brand awareness, high advertising tends to support higher prices in

the later stages of the PLC. (difficult) p. 256b.) High expenditures in advertising have little effect on the sales of a high-quality product.c.) Consumers are willing to pay premium prices for unknown but quality products.d.) The distribution element of the marketing mix has a significant impact on the price.e.) The personal selling element of the marketing mix has little impact on price.

55. Which of the following is not an important factor when considering the reactions of others to your

prices?a.) How will competitors react?b.) Will suppliers raise their prices when they see the company’s price?c.) Will the government intervene and prevent the price from being charged?d.) Will the sales force find the price motivating?e.) Will the price cover your costs and meet company objectives? (moderate) p. 256

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56. The form of countertrade that involves the direct exchange of goods, with no money and no third party involved is called a(n)_______________.a.) barter agreement (moderate) p. 257b.) offsetc.) compensation deald.) buyback arrangemente.) sellback arrangement

57. DaimlerChrysler gives technical advice on motor manufacturing to a Chinese firm, and in exchange

the firm provides DaimlerChrysler with natural rubber for gaskets and seals. This is an example of a(n) _______________.a.) barter agreement (moderate) p. 257b.) offsetc.) compensation deald.) buyback arrangemente.) sellback arrangement

58. In which of the following forms of countertrade would the seller receive full payment if the seller

agrees to spend a substantial amount of that money in that country within a stated time period?a.) barter agreementb.) offset (moderate) p. 257c.) compensation deald.) buyback arrangemente.) sellback arrangement

59. If a chipmaker gives personal computer makers a 2.5 percent discount for paying for their orders

within seven days instead of the standard 30 days, the chipmaker is providing them with a _______________.a.) functional discountb.) quantity discountc.) promotional priced.) cash discount (moderate) p. 258e.) trade allowance

60. A manufacturer of picture frame kits that expects its retailers to provide storage space for the kits

would likely offer a _______________.a.) cash discountb.) quantity discountc.) functional discount (difficult) p. 258d.) distribution allowancee.) slotting allowance

61. Every August, Fat Tire Ale hosts a bike race and beer tasting festival in Taos, New Mexico. During

the festival, local retailers offer _______________ pricing to entice people who come for the festival to come into their stores and buy their merchandise.a.) special-event (moderate) p. 259b.) seasonal discountc.) promotional allowanced.) psychological discounte.) functional discount

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62. Professors and other professional members of the Association for Consumer Policy pay a different membership renewal rate than student members. The Association for Consumer Policy uses _______________ pricing.a.) time b.) customer-segment (moderate) p. 258c.) service-form d.) captive-market e.) image

63. Passengers on a Delta Airlines flight from Charlotte, North Carolina, to Denver, Colorado, are paying

several different fares, depending on when they bought their tickets. In charging these prices, Delta has engaged in _______________ pricing.a.) time (easy) p. 258b.) functional c.) service-form d.) captive-market e.) image

64. The Dave Matthews Band plays a venue in Richmond, Virginia. The floor seats cost $48, the seats

on the edges but close run $36, and the seats in the balconies are priced at $30. This is an example of __________ pricing.a.) psychological b.) imagec.) value-addedd.) perceived-valuee.) location (moderate) p. 258

65. While shopping at Parisian Department Store, you notice all of the neckties are priced at $18.50,

$25.00, or $45.00. Parisian is using _______________ pricing.a.) product-line (moderate) p. 260b.) price-qualityc.) optional-featured.) captive-producte.) customer-segment

66. Onet, an Internet service provider (ISP), charges a membership fee and then a per hour usage charge

for access to the Internet. This is an example of which type of product-mix pricing strategy?a.) captive-pricingb.) product-line pricingc.) byproduct pricingd.) customer-segment pricinge.) two-part pricing (moderate) p. 260

67. You can buy inexpensive printers from Hewlett Packard with many different features, but when you go to buy the toner cartridge refills, the price is often much higher than you expected. This example describes _______________ pricing.a.) product-lineb.) price-qualityc.) optional-featured.) captive-product (moderate) p. 260e.) customer-segment

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68. When renewing her subscription to Rolling Stone magazine, Guillermina was given the opportunity to purchase a subscription to Spin magazine, to get a Rolling Stone travel umbrella, and to purchase a membership in a discount music club all for one low price. The magazine publisher has engaged in _______________ pricing.a.) product-bundling (moderate) p. 260b.) product-line c.) by-product d.) captive-producte.) two-part

69. A manufacturer of industrial drill equipment needs to make a price adjustment. The firm is concerned

about the volatility of the price of industrial diamonds and forged steel that go into making its products. This manufacturer’s best price adjustment strategy would be _______________.a.) adoption of delayed quotation pricingb.) use of escalator clauses (difficult) p. 262c.) product bundling d.) unbundling goods and servicese.) reduction of discounts

Essay Questions 70. Diamond Machine Technology makes a tool for sharpening the blades of pruning sheers and glass

clippers. The company has invested $250,000 in developing this sharpener. This tool, which is about the size of a piece of chewing gum, costs $3 to make. Fixed costs for the sharpener is $10,000. The company expects to sell 100,000 sharpeners this year. Diamond Machine’s markup on sales is 30 percent, and it wants to earn a 20 percent ROI. Calculate both its markup price and its target-return price as well as its breakeven volume at both prices. Which price should Diamond Manufacturing use?

Answer: (difficult) pp. 250-252

71. Goldstar, a Korean manufacturer, has decided to make and market small (125cc-250cc) motorcycles in the United States. Explain in detail the six-step procedure Goldstar should use setting the prices for their products.

Answer: The six steps are: 1) selecting the price objective; 2) determining demand; 3) estimating costs; 4) analyzing competitors’ costs, prices, and offers; 5) selecting a pricing method; and 6) selecting the final price. Each of these can be expanded upon, for example, there are five major objectives listed in the text: survival, maximum current profit, seeking market share, market skimming, and product-quality leadership.

a.) Goldstar’s early motivation might be to get a foothold in the market. This would be seeking

market share.b.) Goldstar needs to determine the demand for small motorcycles in the United States. They might

do this by examining public records for motorcycle registrations and enrollments in Motorcycle Safety Foundation courses.

c.) Goldstar must estimate its own costs to produce and move the motorcycles through the distribution channel. This is effectively a “floor” to the price Goldstar can charge.

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d.) Goldstar needs to understand the cost structures, prices charged, and offers by the competition in the marketplace. Most small motorcycles sold in the United States are made by the “big four” Japanese firms—Honda, Yamaha, Kawasaki, and Suzuki.

e.) Goldstar may want to follow its fellow Korean companies by entering the Unites States with a value pricing strategy. There are certainly other options, including “going-rate” pricing and markup pricing. A value strategy implies that the bikes would be of equal quality at lower prices than the competition.

f.) Goldstar then needs to select the final prices for the bikes. The possible range is probably between $800 and $2,200, depending on all the factors above, as well as the power of the distributors in the channel.

(difficult) pp. 245-256 72. Mattel wishes to sell Barbie dolls in an area of the world where local currency cannot be converted

and local distributors are forbidden to hold any outside currencies. Explain the four ways in which this challenge might be taken care of by Mattel using countertrade methods.

Answer: The four methods are: barter, compensation deal, buyback arrangement, and offset. a.) Mattel might use barter, by offering to trade straight across 100,000 Barbies for 35,000 bolts of

locally-manufactured textiles (which Mattel would then sell in another marketplace for cash).b.) Mattel might use a compensation deal, wherein they accept some local currency to be used when

Mattel executives travel in the country, and the rest of the deal is paid in products, such as the textiles mentioned above.

c.) Mattel might use a buyback arrangement, in which they fund a small production facility in the country, and agree to be paid back over time in dolls produced there, rather than in currency.

d.) Mattel could use the offset method, by accepting full payment in the nonconvertible currency and then immediately or over time spending that currency in the country for other exportable goods which Mattel could then resell.

(moderate) p. 257 73. A U.S. condiment manufacturer wants to market its product internationally, but its marketing director

is concerned about countertrading. What you can tell her about countertrading? Which forms should she expect to have to deal with if she plans on selling her products to Eastern Europe?

Answer: American companies are often forced to engage in countertrading if they want to do business in certain countries. Countertrades may account for 15 to 20 percent of world trade and take the following forms: (1) Barter is the direct exchange of goods with no money and no third-party involvement. (2) In a compensation deal, the seller receives some percentage of the payment in cash and the rest in products. (3) In a buyback arrangement, the seller sells a plant, equipment, or technology to another country and agrees to accept as partial payment products manufactured with the supplied equipment. (4) In an offset, the seller receives full payment in cash but agrees to spend a substantial amount of that money in the buying country within a stated period of time. The marketing director can expect to deal with all of the above except a buyback arrangement.(moderate) p. 257

74. Provide an explanation and examples of the ways in which a firm might use discriminatory pricing.

When does price discrimination work?

Answer:The text provides examples of six ways in which discriminatory pricing could be carried out:

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customer-segment pricing, product-form pricing, image pricing, channel pricing, location pricing, and time pricing.a.) Customer-segment pricing means that the customer groups have something different about them,

such as charging less for senior citizens at movies versus what the general public has to pay.b.) Product-form pricing means that you price different forms of the same product differently. For

example, you might charge more per ounce for laundry detergent, depending on the total amount purchased.

c.) With image pricing, the seller can actually sell the same product packaged differently for different prices. This happens with tires—tire-makers sell their own brands, and sell the very same tire with a different brandmark for another price, due to the difference in prestige of the brands offered.

d.) Distributing product at different locations is another opportunity to discriminate in pricing. As an example, popcorn sold at the movies is priced much higher than popcorn sold at a school fair.

e.) Using different channels affords the opportunity to charge different prices. A bottle of beer at the grocery store might cost $1, whereas when the same amount of beer is sold either in a bottle or on tap at a bar, the price might double or even triple.

f.) Airlines use time pricing to discriminate in prices to different customers. They vary the price according to day of the week and time of day, as well as using other factors to help them fill the maximum amount of seats.

Discrimination works when: (1) the market is segmentable and different segments have different levels of demand; (2) those who qualify for the lower costs cannot resell to those that do not; (3) competitors cannot undersell the higher prices; (4) the cost of segmenting doesn’t exceed the additional revenue derived by discrimination; (5) customers are not antagonistic because of the differences, and; (6) the discrimination is not illegal.(moderate) pp. 257-259

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Mini-Cases Mini-Case 13-1Fugazi is a punk band from Washington, DC. The leader, Ian, insists that the band not focus on the commercial aspects of making music, so the band typically charges no more than $6 for a live show, they sell no tee-shirts or other Fugazi gear, and they will only play in all-ages venues. To increase creative and financial control, Ian and other members of the band package and sell their self-produced CDs, which they sell for $10 online. 75. Refer to Mini-Case 13-1. When it comes to pricing their music, Fugazi uses the ________ method.

a.) value (moderate) p. 253b.) going-rate c.) markupd.) skimminge.) target-return

76. Refer to Mini-Case 13-1. The underlying objective or philosophy used by Fugazi in setting their

prices is probably a.) survival—in this case, keeping the band “alive”b.) maximum current profit—using the strict definition in the bookc.) maximum market share—in this case, getting as many people to listen to the band as

possible (moderate) p. 246d.) market skimming—using the strict definition in the booke.) product-quality leadership—the logic being that offering the best music possible will cost more

than providing average-quality music 77. Refer to Mini-Case 13-1. Every time Fugazi tours, they are able to pick up more ideas about how

to minimize the costs of going on tour, in order to make a fair and increasing return for their efforts. This is an example of _______________.a.) total costs fallingb.) activity-based accountingc.) target costingd.) the learning curve (moderate) p. 249e.) consideration of customers’ demand schedules

Mini-Case 13-2According to an article in the March 1935 issue of Fortune magazine, cement as we know it today first appeared in 1872. In 1890, 336,000 barrels were produced. In 1910, it was 76,500,000 barrels. By 1929, the concrete industry was producing 169,000,000 barrels annually. Cement’s growth was directly linked to the construction of roadways for the automobile. Because of its primary usage, there were strict regulations developed as to its content. As a result, the only way that one cement manufacturer differed from another was price.

While a cement maker at the time might contend that its cement was superior to the others on the market (and most of them made this contention), no cement company was able to translate this added value into price. Another distinguishing characteristic of the cement industry was the ratio between a company’s selling price and its transportation costs. A barrel of cement weighed 376 pounds and cost $.42 to ship 50 miles. Fixed costs for International Cement Company (just 50 miles west of New York City) in 1935 were $64,000,000. Much of International Cement’s products were sold in New York City, where cement sold for $2.40 regardless of how far away it was manufactured. Variable manufacturing costs per barrel were $.70; it takes 600 pounds of ingredients to make one barrel.

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78. Refer to Mini-Case 13-1. Buyers of cement were very price sensitive because _______________.a.) there were no brands that appeared to be superior to any others (difficult) p. 247b.) there were no substitutes for cementc.) the purchase of cement was not a large part of the total cost of building a roadd.) the cement can be easily compared because of the requirement that every bag of cement meets the

specifications set out by the American Society for Testing Materialse.) cement can be easily stored

79. Refer to Mini-Case 13-1. Calculate the break-even volume in barrels for the International Cement

Company.a.) 17,679,559b.) 26,666,667c.) 37,647,059d.) 50,000,000 (moderate) p. 252e.) 152,380,953

80. Refer to Mini-Case 13-1. What type of pricing structure was being used in the cement industry in

1935?a.) valueb.) going-rate (moderate) p. 253c.) markupd.) perceived-valuee.) target-return

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