Question 20 1. Large amusement parks charge entrance fees rather than fee per ri

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Question 20 1. Large amusement parks charge entrance fees rather than fee per ride because

a. Customers are more sensitive to paying a fee per ride

b. Customers are less sensitive to paying a fee per ride

c. Customers view paying per ride as a smaller cost

d. None of the above

Question 21 1. Beverage Merger Cott Corp. markets a portfolio of beverages, bottled waters, beverage, and coffee delivery systems for homes and offices. In November, 2014, it has agreed to merge with DS Services of America, a water and coffee direct-to-consumer services provider. What is the expected effect of this merger on price-cost margins? the price cost margin will enlarge or increase as the cost goes down.

Question 22 1. Firm A owns produces both toothpaste and toothbrushes. In order to increase profits the firm must

a. Increase prices for both toothbrushes and toothpaste

b. Increase prices on toothbrushes but keep the price on toothpaste constant

c. Increase prices on toothbrushes and increase the price on toothpaste

d. Decrease prices for both toothbrushes and toothpaste

Question 23 1. For a cruise liner deciding how to price its rooms, if the cost of overpricing is higher than the cost of underpricing, then the management of the cruise liner should

a. Price lower than what they expect would fill capacity

b. Price higher than what they expect would fill capacity

c. Price such that they would expect to just fill capacity

d. None of the above

Question 24 1. If a hot dog manufacturer acquires a bakery that primarily bakes hot dog buns, you would likely see

a. Lower prices for both the hot dogs and the buns

b. Higher prices for both the hot dogs and the buns

c. Higher prices for the buns but lower prices for the hot dogs

d. Higher prices for the hot dogs but lower prices for the buns

Question 25 1. The general rule to increase profits when two close complementary brands are jointly owned is

a. Increase prices for both brands

b. Decrease prices for both brands

c. Increase prices on one brand, decreasing it for the other

d. Increase prices on one brand, keeping the prices of the second brand constant

Explanation / Answer

1. a. Customers are more sensitive to paying a fee per ride
2. the price cost margin will enlarge
3. b. Increase prices on toothbrushes but keep the price on toothpaste constant
4. a. Price lower than what they expect would fill capacity
5. a. Lower prices for both the hot dogs and the buns
6. d. Increase prices on one brand, keeping the prices of the second brand constant

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