QUIZ # ___________Managing in Complex Environments QUIZ #3 Name: ____Answers__________________Fall Semester, 2012Professor Atkin FORM #_____ My lecture time is: _Please see end for statistics__This closed-book, closed-note quiz has 35 3-point questions to be answered on optical scan sheets.To get a grade, you must return (a) the quiz, (b) the answer sheet and (c) the completed peerevaluation. Good luck!1. If CM > 0, then break-even has been achieved. Ba. true b. false2. Firms selling premium-priced goods generally produce greater revenue than do firms selling discount-priced goods. Ba. true b. false3. Pitt has lower tuition rates for in-state students as compared to out-of-state students. This is an example of…a. price discrimination b. pricing skimming c. both of these d. none of these A4. Earning monopolistic rent usually implies that explicit collusion has occurred. Ba. true b. false5. If price = unit variable cost, then breakeven __________ occur. Da. will b. probably will c. probably will not d. cannot 6. Price penetration can be used to achieve an entry barrier pricing objective. Aa. true b. false7. Other things equal, contribution margin increases if… Da. fixed cost decreases b. breakeven quantity decreasesb. both of the above d. none of the above 8. Assume two price policies Pol1 and Pol2. Further assume that the firm observes Pol2 is revenueneutral. Given just this information, Pol2 most likely produces… Da. more NI than Pol1 b. the same NI as Pol1 c. less NI than Pol1 d. insufficient information todetermine9. A November 20, 2012 Wall Street Journal article observed that “Driving the …(growing) gray market in foreign drugs is a significant shift in the economics of cancer care…” suggesting that…Ba. US patients increasingly seek cancer treatment outside of the USa. cancer care drugs may be available at lower prices outside of the US than inside the USb. non-US residents frequently seek cancer care in the US driving up the prices for drugsc. all of these 10. Assume you are a brand manager. You know from experience that the market is very price sensitive and all rivals are fighting to increase share. Your boss has challenged you to increase contribution margin by 4-5% over the next year. Your first move is most likely to consider… Ca. increasing price b. decreasing fixed costsc. decreasing variable costs d. all three are equally appropriate11. Assume that Pitt, as an incentive to increase enrollment in early morning classes, reduced tuition for 8 and 9 am classes by 10%. This is an example of _________ . Ba. price penetration b. demand-based pricing c. both of these d. none of these12. Last year, Whole Foods increased the price of prepared sandwiches by 10% and observed that quantity sold decreased by about 12%. All costs remain unchanged. From just this information, we can conclude that breakeven Q has increased. Ba. true b. false13. An assumption of the breakeven model is that worker and machine productively increases monotonically.a. true b. false B14. As a product enters maturity, there are incentives to decrease… Da. direct labor costs b. direct material costs c. fixed costs d. all of these15. According to online.wsj.com (Nov. 23, 2012), “When Target Corp advertised plans to sell a $400 Dyson Ball vacuum cleaner for $269, Best Buy Co responded by cutting its online price for the vacuum by $80, to $300.” This is an example of… Ca. price discriminationb. penetration pricing c. defensive pricingd. all of these16. In class I discussed a type of auction in which the price starts very high, then drops, and is won by the first bidder. In this case, the final price is set by… B a. the seller b. the buyer c. jointly by the buyer and seller d. none of the above17. This season, the Pittsburgh Pirates baseball team offered one class of seats in using a dynamic pricing system, which enabled the team “…to adjust single-game ticket prices in real-time basedon ticket availability and changing factors such as league standings, opposing team, rivalries, star players, day of the week, and supply and demand” according to team’s official web site. This is an example of ________ pricing. Ca. cost-based b. competition-based c. demand-based d. auction18. According to a press release issued by Starbucks on November 23, 2012, “…customers who purchase the Verismo(R) System by Starbucks (a single cup brewing machine)…will receive Starbucks Gold level status and all of the highly coveted year-round rewards that come with (Gold status).” This is an example of… Aa. sales promotion b. a horizontal marketing system c. both of these d. none of these19. Giant Eagle has an affiliation program in which every $50 in groceries earns you 10 cents reduction on the price of gasoline and every 10 gallons of gasoline purchased earns you a 1% reduction on groceries. This is an example of… Ca. sales promotion b. switching costs c. both of these d. none of these 20. One product sold under the Haines brand is 100% cotton tee shirts. In 2010, the price of cottonincreased > 50%. Their manufacturing is typically done in very low labor cost countries, andmarket research suggests that Haines customers are very price sensitive. Given just thisinformation, we would expect Haines to… Ca. increase tee shirt prices to offset the increase in cotton pricesb. decrease the pay of their manufacturing employees to offset the increase in cotton pricesc. attempt to shift to a less expensive “cotton blend”d. switch to cost-plus pricing13. In the airline industry, we have seen many firms add fuel surcharges and fees for a second pieceof luggage. This is probably the result of… Aa. signaling b. explicit collusion c. demand-based pricing d. all of these 21. Sales promotions are generally not used with premium-priced goods. Ba. true b. false21. After years of not using it, Starbucks now does significant national advertising. One likely implication is that breakeven quantity most likely… Ca. decreased b. stayed constant c. increased d. now exceeds capacity22. If you log onto the web site of The Financial Times (sort of the WSJ of the UK), you get a pop-up that says, in part, “We use cookies…(on) our websites to…enhance your user experience…” and then