Multiple Choice Answers

A firm that is plagued with overcapacity, intense competition, or changing wants would do better if it pursues ________ as its major objective.
A. giving up
B. Survival
C. profit maximization
D. product-quality leadership
E. market skimming
A market-penetration pricing strategy is most suitable when _______.
A. the market is characterized by inelastic demand
B. a high price dissuades potential competitors from entering the market
C. production and distribution costs fall with accumulated production experience
D. a low price slows down market growth
E. it ends in all 7s ($8.77, $2.77, etc.)
Costs that differ directly with the level of production are known as ________.
A. variable costs.
B. fixed costs.
C. opportunity costs.
D. highway robbery.
E. overhead costs.
When hotels, motels, and airlines offer discounts in slow selling periods, they are said to be offering ________.
A. quantity discounts
B. trade-in allowances
C. trade discounts
D. seasonal discounts
E. flying discounts
The decline in the average cost of production with accumulated production experience is called the ________.
A. demand curve
B. supply chain
C. learning curve
D. indifference curve
E. value chain
When Apple introduced its iPhone, it was priced at $599. This allowed Apple to earn the maximum amount of revenue from the various segments of the market. Two months after the introduction, the price has come down to $399. What kind of a pricing did Apple adopt?
A. market-penetration pricing
B. sneaky
C. target-return pricing
D. loss-leader pricing
E. market-skimming pricing
Competitors are most likely to react to a price change, when ________.
A. the firm enjoys a monopoly.
B. buyers have limited information.
C. there are few competing firms.
D. the firm has a weak value proposition.
E. they have a headache.
________ pricing is a matter of reengineering the company’s operations to become a low-cost producer without sacrificing quality.
A. Going-rate
B. Auction-type
C. Markup
D. Perceived-value
E. Value
The first step in estimating demand is to ________.
A. decipher the experience curve
B. analyze competitors’ cost
C. select a pricing method
D. calculate fixed costs
E. understand what affects price sensitivity
If demand hardly changes with a small change in price, the demand is said to be ________.
A. unit elastic
B. fair
C. flexible
D. strained
E. inelastic
A manufacturer has invested $750,000 in a new product and wants to set a price to earn a 15 percent ROI. The cost per unit is $18 and the company expects to sell 50,000 units in the first year. Calculate the company’s target-return price for this product.
A. $20.25
B. $18.23
C. $25.50
D. $20.70
E. $18.10
Troma Inc., is a famous manufacturer of cookware, that follows a traditional distributor-retailer system to distribute its products. The company abstains from the use of automated supply chain management (SCM) system mainly due to the fear of unknown. However, rapidly escalating operational costs and inefficiencies have made it absolutely necessary for the company to implement an SCM system. The company goes for a big-bang installation of SCM system to become more competitive and cost effective. Identify the adopter group to which Troma belongs.
A. early adopter
B. innovator
C. late majority
D. early majority
E. laggard
In consumer-goods market testing, the company seeks to estimate four variables. These four variables are: trial, first repeat, adoption, and ________.
A. price sensitivity
B. usage convenience
C. preferential treatment
D. guaranteed response
E. purchase frequency
The trade-off approach may be easier to use when there are/is ________.
A. many variables
B. only a few alternatives
C. only one highly desirable solution
D. observers that are biased
E. possible offers that are limited
Many believe that customer focus does not help to create better or new products. This belief rests on which of the following ideas?
A. Customers are at times unaware of what they really want.
B. Having too much customer focus leads to a negative brand image.
C. Such new product developments decrease the chances of success.
D. Customers do not consider the cost of design when suggesting.
E. It increases the cost of testing a product or service.
________ works by listing all the normal assumptions about an entity and then turning them around.
A. Forced relationships
B. Attribute listing
C. Lateral marketing
D. Reverse assumption analysis
E. Morphological analysis
Which of the following characteristics is closely associated with late majority adopter groups?
A. opinion leadership
B. deliberate pragmatism
C. high risk aversion
D. low price sensitiveness
E. superior technological knowledge
It has been observed that most new products have shorter product life cycles. What is the reason for this?
A. Most new products are not backed by a marketable idea.
B. New products do not get adequate management support.
C. Most new products do not use technology.
D. Social and governmental constraints lead to this failure.
E. Rivals quickly copy products that are successful.
The degree to which the beneficial results of an innovation’s use are observable or describable to others is called ________.
A. divisibility
B. plainness
C. relative advantage
D. compatibility
E. communicability
The highest loss a project can create is called ________.
A. rapid prototyping income
B. maximum investment exposure
C. incremental yearly exposure
D. payback income
E. cannibalized income
Brown & Smith, Inc. engages in the design, development, making, and retail of designer jewelry in North America. Before approving a new design of jewelry the company draws it on a computer and then produces models to show potential consumers for their reactions. This allows the company to analyze the possible customer reaction. Identify the concept testing method used here.
A. conjoint analysis
B. perceptual mapping
C. virtual reality testing
D. digital fabrication
E. rapid prototyping
Identify the stage in the consumer adoption process in which the customer is stimulated to seek information about the innovation.
A. adoption
B. trial
C. awareness
D. evaluation
E. interest
Joseph, a student of the Columbia University, finds many of his classmates have purchased the I-pad tablet PC from Apple Computers. I-pad, launched a few months before has been identified as a very useful product and many students in the U.S. have rated it highly. Considering all these, Joseph also decides to purchase an I-pad. Which of the following is the adopter group to which Joseph belongs?
A. laggard
B. late majority
C. early majority
D. innovator
E. early adopter
________ means presenting the product concept to target consumers, symbolically of physically, and getting their reactions.
A. Perceptual mapping
B. Concept development
C. Concept testing
D. Brand-positioning mapping
E. Brand attribute mapping
A(n) ________ is an elaborated version of a product idea expressed in consumer terms.
A. beta product
B. test brand
C. product concept
D. alpha product
E. business schedule

Multiple Choice Answers

Marketing communications in almost every medium and form have been on the rise, and some consumers feel they are increasingly invasive.
A. true
B. false
C. I don’t know. My thoughts are private.
The practice of using call centers, where employees receive calls from customers and provide service by taking orders and answering queries, is called ________.
A. customer response marketing
B. reactive marketing
C. guerilla marketing
D. inbound telemarketing
E. internal marketing
In a one-sided message, presenting the strongest argument first arouses attention and interest, important in media where the audience often does not attend to the whole message.
A. true
B. false
C. yeah, but who wins?
________ refers to simple exaggerations in advertisements that are not meant to be believed and that are permitted by law.
A. Subliminal advertising
B. Puffery
C. Boosterism
D. Astroturfing
E. Doublethink
In building brand equity, marketers should be “media neutral” and evaluate all communication options on effectiveness and efficiency.
A. true
B. false
C. I don’t know. I have no opinion. I am neutral.
Which of the following is a form of earned media for marketing communication messages?
A. celebrities endorsing products
B. social network discussions about products
C. experts providing product reviews
D. sponsored advertisements promoting products
E. company salespeople contacting target buyers
When planning communications for a detergent brand, which of the following sequences of buyer responses should the marketer choose on which to base the communications model?
A. learn-do-feel
B. feel-learn-do
C. do-feel-learn
D. feel-do-learn
E. learn-feel-do
Personal selling refers to people-to-people oral, written, or electronic communications that relate to the merits or experiences of purchasing or using products or services.
A. true
B. false
C. I don’t know. My cat told me not to study.
Luke is considering the various options available to him to promote an energy-drink, Turbozade, that is seeing decreasing sales volumes after having peaked some time back. Which of the following marketing communications tools should Luke focus marketing efforts on to keep the sales volume up?
A. direct marketing
B. events and experiences
C. publicity
D. advertising
E. sales promotions
The number of times within a specified time period that an average person or household is exposed to an advertising message is known as ________.
A. bruising
B. frequency
C. depth
D. reach
E. impact
Which of the following sequences accurately represents the hierarchy-of-effects model of marketing communications?
A. awareness-interest-evaluation-trial-adoption
B. knowledge-persuasion-decision-implementation-confirmation
C. exposure-reception-cognitive response-attitude-intention-behavior
D. attention-interest-desire-action
E. awareness-knowledge-liking-preference-conviction-purchase
Marketing communication strategy can be decided by conducting an image analysis by profiling the target audience in terms of ________.
A. psychographic characteristics
B. brand knowledge
C. purchase patterns
D. income levels
E. demographic characteristics
The “Got Milk” campaign was intended to boost the sagging milk consumption among Californians in the 1990s. The campaign ads highlighted the inconvenience of running out of milk when intended to be used with certain foods, such as cookies or muffins, advising consumers to stock up on milk to avoid such inconveniences. The “Got Milk?” campaign an example of ________.
A. informational advertising
B. comparative advertising
C. reminder advertising
D. reinforcement advertising
E. institutional advertising
To be branded, physical products need not be differentiated.
A. true
B. false
C. wouldn’t a tattoo be less painful than a brand?
Value pricing requires a company to reengineer its operations to become a low-cost producer.
A. true
B. false
C. value schmalue
Purchase decisions are based on how consumers perceive prices and what they consider the current actual price to be – not the marketer’s stated price.
A. true
B. false
C. obfuscation?
Durable products normally require less personal selling and service and less seller guarantees than nondurable goods.
A. true
B. false
C. I don’t know. My answer expired.
In the case of prestige goods, the demand curve sometimes slopes upward.
A. true
B. false
C. help! I’m being held captive in an online testbank
For price discrimination to work ________.
A. members in the lower-price segment must be able to resell the product to the higher-price segment
B. competitors must be able to undersell the firm in the higher-price segment
C. the practice must not breed customer resentment and ill will
D. the market must be segmentable and the segments must show similar intensities of demand
E. the extra revenue derived from price discrimination must not exceed the cost of segmenting and policing the market
Murray’s retail store offers all its products at $2 lesser than its competitors throughout the year. The store never runs any promotional campaigns or offers any additional special discounts. Murray’s retail store is following a(n) ________.
A. target-plus pricing policy
B. auction-type pricing policy
C. everyday low pricing policy
D. going-rate pricing policy
E. urban pricing policy
A company must make payments each month for rent, heat, interest, and salaries. These are ________.
A. total costs
B. variable costs
C. fixed costs
D. target costs
E. ridiculous
Many consumers are willing to pay $100 for a perfume that contains $10 worth of scent because the perfume is from a well-known brand. What kind of a pricing is the company depending on?
A. makeup pricing
B. going-rate pricing
C. market-skimming pricing
D. target pricing
E. image pricing
Which of the following is true regarding price elasticity?
A. Within the price indifference band, price changes have little or no effect on demand.
B. If demand is elastic, sellers will consider increasing the price.
C. The higher the elasticity, the lesser is the volume growth resulting from a 1 percent price reduction.
D. When demand is inelastic, sellers should lower prices in order to increase total revenue.
E. Price elasticity does not depend on magnitude and direction of the contemplated price change.
________ price refers to what the consumers feel the product should cost.
A. Typical
B. Usual discounted
C. Maximum retail
D. List
E. Fair

When consumers examine products, they often compare an observed price to an internal price they remember. This is known as a(n) ________ price.
A. market-skimming
B. target
C. accumulated
D. reference
E. ticket

Multiple Choice Answers

ACME Solutions is a large distributor of Aldor phones in Canada. The company distributes products to various retailers in the New Brunswick province. Recently ACME received several complaints from its retailers that their orders are not delivered on time. They also complain that Alcart offers preferential treatment to some of the other retailers in the region. This is an example of ________ conflict.
A. horizontal
B. parallel
C. vertical
D. intermediate
E. multichannel
Question 2
Spike Inc. is a sportswear manufacturer that recently launched its new line of customizable running shoes. The shoes come with a digital component that allows them to adapt to the runner’s biomechanics. To promote this new product, Spike launches an advertising campaign and also ropes in a famous athlete to endorse the product. This is an example of a ________.

A. push strategy
B. trade promotion
C. backward flow
D. reverse flow
E. pull strategy
Question 3
As a service output produced by marketing channels, product variety refers to the ________.

A. add-on services provided by the channel
B. degree to which the channel makes it easy for customers to purchase a product
C. assortment provided by the marketing channel
D. ability of a product to provide incremental value
E. units the channel permits a customer to purchase at once
Question 4
What is the major difference between a conventional marketing channel and a vertical marketing system (VMS)?

A. A conventional marketing channel has elements such as retailers and wholesalers whereas these elements are not present in a VMS.
B. A VMS has many intermediaries whereas a conventional marketing channel has a limited number of intermediaries.
C. Elements in a conventional marketing channel act as separate businesses whereas the elements in a VMS act as a unified system.
D. A VMS is characterized by an independent producer whereas a conventional marketing channel is characterized by multiple producers.
E. Producers have complete control over the other members in a conventional marketing channel whereas this control is minimal in a VMS.
Question 5
In competitive markets with low entry barriers, the optimal channel structure will inevitably change over time.

A. true
B. false
C. If high fences make good neighbors, do low fences make good markets?
Question 6
When is a pull strategy appropriate?

A. when it is a low involvement purchase
B. when there is low brand loyalty
C. when the product is an impulse item
D. when consumers are able to perceive differences between brands
E. when you’re putting your new sweater on over your head and you get stuck
Question 7
ACME is a highly respected brand. Many retailers want to be associated with the brand because of this reputation. What kind of power does ACME obtain due to this reputation?

A. legitimate
B. functional
C. referent
D. reward
E. coercive
Question 8
Armon Apparels designs, manufactures, and distributes athletic apparel and accessories for men and women. The company has only nine distributors across the United States. These distributors control a nationwide network of 600 retailers. The company does not sell its products through other channels. This is an example of ________ distribution.

A. selective
B. exclusive
C. intensive
D. passive
E. internal
Question 9
Companies should first think of the target market and then design the supply chain backward from that point. This strategy is called demand chain planning.

A. true
B. false
C. neither a nor b
Question 10
A(n) ________ vertical marketing system combines successive stages of production and distribution under single ownership.

A. controlled
B. corporate
C. contractual
D. administered
E. regulatory
Question 11
A marketing channel overcomes the time, place, and possession gaps that separate goods and services from those who need or want them.

A. true
B. false
C. Wouldn’t a ladder work better?
Question 12
Exclusive dealing arrangements are mainly used by companies looking for an edge in markets increasingly driven by ________.

A. price
B. add-on services
C. efficiency
D. greed
E. product variety
Question 13
A franchisee owner is unsatisfied because the manufacturer provides more benefits to a wholesaler. This conflict is an example of a(n) ________ conflict.

A. horizontal
B. vertical
C. nasty
D. intermediate
E. multichannel
Question 14
________ are sets of interdependent organizations participating in the process of making a product or service available for use or consumption.

A. Marketing terrains
B. Sales territories
C. Interstitials
D. Marketing channels
E. Communication channels
Question 15
An intensive distribution strategy serves well for ________.

A. private label products
B. industrial equipment
C. newspapers
D. premium cars
E. commercial trucks
Question 16
Total Beverages, a maker of fruit juices and health drinks, recently launched a new brand of packaged drinking water called AquaPure. In order to induce distributors to carry the product, Total offers all its intermediaries a free refrigerator to store bottles of AquaPure. This is an example of a ________.

A. reverse flow
B. consumer promotion
C. pull strategy
D. push strategy
E. backward flow
Question 17
Which of the following is an example of a zero-level channel?

A. A company takes online orders from customers and ships the products to them.
B. An organization uses a combination of direct salespeople and sales agencies to increase sales.
C. A company sells its products through chains of supermarkets and other large sellers.
D. A large company forms alliances with smaller companies to increase sales coverage.
E. A company sells its products through wholesalers and retailers.
uestion 18
A producer must modify its channel design and arrangements if ________.

A. the market size remains unchanged for a particular period
B. consumer buying patterns change
C. the competition in the market stabilizes
D. the product is in the growth stage of its life cycle
E. the firm’s profits stabilize
Question 19
Which of the following is an advantage of using the percentage-of-sales method to determine the marketing communications budget?

A. The percentage-of-sales method encourages stability when competing firms spend approximately the same portion of their sales on communications.
B. The percentage-of-sales method views sales as the determiner of communications rather than as the result.
C. The percentage-of-sales method encourages building the communication budget by determining what each product and territory deserves.
D. The percentage-of-sales method encourages experimentation with countercyclical communication or aggressive spending.
E. The percentage-of-sales method leads to a budget set by market opportunities rather than the availability of funds.
Question 20
A “do-feel-learn” response sequence is considered appropriate when the audience has high involvement but perceives little or no differentiation within the product category.

A. true
B. false
C. Ooh, touchy-feely. I knew I liked Accounting better.
Question 21
Which of the following is the correct order of stages that a buyer is assumed to pass through, by the four classic response hierarchy models?

A. behavioral stage-affective stage-cognitive stage
B. affective stage-cognitive stage-behavioral stage
C. cognitive stage-affective stage-behavioral stage
D. affective stage-behavioral stage-cognitive stage
E. cognitive stage-behavioral stage-affective stage
Question 22
Though the target audience can be profiled in terms of demographic, psychographic, or behavioral segments, it is often useful to do so in terms of usage and loyalty.

A. true
B. false
C. I don’t know. I’m too loyal to my thoughts to express them.
Question 23
Which of the following marketing communications tools is most influential at the reordering stage of buyer readiness?

A. publicity
B. direct marketing
C. sales promotion
D. events and experiences
E. interactive marketing
Question 24
All response hierarchy models of the communication process assume the buyer passes through cognitive, affective, and behavioral stages, in that order. Which of the following product categories lends itself most appropriately to such a “learn-feel-do” sequence?

A. personal computer
B. clothes
C. real estate
D. air tickets
E. dish-washers
Question 25
Marketers can set communications objectives at any level of the hierarchy-of-effects model.

A. true
B. false
C. Well! I guess they think they can set anything anywhere, huh?

Expert Answers

1  The primary standard-setting body for accounting and financial reporting by a state-supported college or university is:
FASB.
GASB.
AICPA.
All of the above.
2.  Which of the following funds is a fiduciary fund?
Permanent fund
Capital project fund.
Debt service fund
Agency fund.
3.   Which of the following funds is a proprietary fund?
Internal service fund.
Special project fund.
Capital project fund.
Permanent fund.
4.   A state issued bonds for the purpose of financing a major capital improvement.  Which fund is the most appropriate fund in which to record the receipt of the bond proceeds?
General Fund.
Special Revenue Fund.
Capital Projects Fund.
Debt Service Fund.
5.  The amount of pension expenditures that should be recognized in the General Fund financial statements during the current year is
The amount paid.
The amount paid plus the amount that will be paid with available expendable financial resources.
The amount paid so long as it does not exceed the actuarially determined amount.
The actuarially determined amount.
6.  Smith College, a private college, received a $1 million donation.  The donor specified that the principal of her gift could never be used for program activities but the earnings on the principal must be used to provide scholarships to academically qualified students in the business school.  The $1 million gift would increase which of the following categories of net assets?
Unrestricted net assets.
Temporarily restricted net assets.
Permanently restricted net assets.
Either (b) and (c).
7.A Comprehensive Annual Financial Report for the City of Sun Valley need not include which of the following sections?
Condensed summary data.
Introductory section.
Financial section.
Statistical section.
8. Greenwood City Light & Water (a proprietary fund) contributes to a defined benefit plan for its employees.  During 2007, Greenwood City contributed $27 million to its pension plan.  The City also made an additional $3 million contribution related to 2006.  The actuarially determined contribution requirement for 2007 was $32 million.  The amount of pension expense recognized by Greenwood City Light & Water for 2007 should be:
a)            $ 0
b)           $ 27 million
c)            $ 30 million
d)           $ 32 million
9.  A City levies a 2% sales tax that is collected for them by the State.  Sales tax must be remitted by the merchants to the State by the 20th day of the month following the month in which the sale occurred.  The State has a policy of remitting sales taxes to the City within 30 days of collection by the State.  Cash received by the State related to sales tax is as follows:

Amount received 1/20/07, applicable to December 2006 sales                                         $  50
Amount received 2/20/07, applicable to January 2007 sales                                             $  15
Amount received 3/20/07, applicable to February 2007 sales                                           $  15
Amount received during 2007 related to March-November 2007 sales                           $190
Amount received 1/20/08 for December 2007 sales                                                            $  55
Amount received 2/20/08 for January 2008                                                                          $  20
Amount received 3/20/08 for February 2008                                                                        $    5

Assuming the City uses the same period to define “available” as the maximum period allowable for property taxes, what amount should it recognize as sales tax revenue in its governmental fund financial statements for the fiscal year ended 12/31/07.
a)    $215.
b)    $265.
c)    $270.
d)    $275
Use the following information to answer #10 and #11.
The City of Carefree voted to establish an internal service fund to account for its printing services.  The City transferred $500,000 cash from the General Fund to the newly created internal service fund.
10.The appropriate entry in the general fund to account for this transfer would be a credit to cash for $500,000 and a debit for $500,000 to
Due from Internal Service Fund.
Transfer Out.
Expenditures.
Investment in Internal Service Fund.
11.The appropriate entry in the internal service fund is a debit to cash for $500,000 and a credit for $500,000 to
Due to General Fund.
Transfer In.
Capital Contribution (Revenues).
Investment provided by the General Fund.
12. The City of Chandler  built a new city hall and financed construction by issuing bonds due in installments over the next 30 years.  The bond principal and interest will be paid by a special tax levied on property in the City.  The revenue received from this special tax should be accounted for in which of the following funds?
General fund.
Internal service fund.
Capital project fund.
Debt service fund.
13. Bear Creek Golf Course is a City-owned golf course that collects greens fees in amounts sufficient to cover its expenses.  Bear Creek Golf Course should be accounted for in which of the following funds?
Internal service fund.
Enterprise fund.
General fund.
Special revenue fund.
Problem #1.
Assume that the City of Casco maintains its books and records in a manner that facilitates preparation of the fund financial statements.  The City engaged in the following transactions related to its general fund during the current fiscal year.  The City formally integrates the budget into the accounting records.  The City does not maintain an inventory of supplies.  All amounts are in thousands.
REQUIRED:  Prepare, in summary form, the appropriate journal entries.
(a)  The City Council approved a budget with revenues estimated to be $600 and expenditures of $590.
(b)  The City ordered supplies at an estimated cost of $25 and equipment at an estimated cost of $20.
(c)  The City incurred salaries and other operating expenses during the year totaling $550.  The City paid for these items in cash.
(d)  The City received the supplies at an actual cost of $23.
(e)  The City collected revenues of $595.

Problem #2.
Hometown charities annual fund raising drive in 2010 raised pledges of $600,000 of which $400,000 were collected in 2010 and $100,000 were collected in 2011.  Hometown Charities estimates $75,000 of the remaining pledges will never be collected.
(a)The increase in unrestricted net assets in 2010 as a result of the fund raising drive is
$600,000.
$525,000.
$400,000.
$125,000.
(b)The increase in temporarily restricted net assets in 2010 as a result of the fundraising drive is
$600,000.
$525,000.
$400,000.
$125,000.
(c) In 2011, the change in temporarily restricted net assets is
$0
$100,000 decrease.
$100,000 increase.
$500,000 decrease.
(d) In 2011, the change in unrestricted net assets is
$0
$100,000 increase.
$100,000 decrease.
$500,000 increase.

Problem #3.
Howard City maintains the following funds:
1. General
2. Special revenue
3. Capital projects
4. Debt service
5. Enterprise
6. Investment trust
7. Permanent
8. Agency
For each of the following transactions, indicate which fund would most likely be used to report the transaction:
a. The City collects $1 million of taxes for an independent fire district located within the City.
b. The City spends $1.2 million on street maintenance using the proceeds of a city gas tax dedicated for road and highway maintenance and improvements.
c. The City receives a bequest of $1.5 million.  The donor’s Will, requires that the principal amount be invested in perpetuity and that the earnings on the investment be used to maintain a city park to be renamed for the donor.
d. The City collects water and sewer fees of $4.2 million.
e. The City pays $4 million to a contractor for work on the new bridge.
f. The City receives $1.3 million to invest on behalf of the County.
g. The City pays its police officers wages of $325,000.
h. The City pays $2.2 million in Bond Interest on its general obligation debt.