Class: XII Department: Commerce

Worksheet: 02 Subject Specific Skills

Topic: Ch2 Price

1. On Wednesdays, Big Bazaar used to cut back the price of fruits and vegetables to attract large
number of customers, however, no change was made on the price of the other products. What are
vegetables and fruits called for Wednesday?

(a) Loss Leaders

(b) Assorted products

(c) Branded products

(d) Premium products

2. Name the pricing method which tells the firm what prices competitors are charging in the market,
but it ignores replacement costs issue

(a) Mark-up pricing

(b) Cost plus pricing

(c) Break-even pricing

(d) Demand oriented pricing

3. Which of the following is an external factor that affects pricing decisions?

(a) Product differentiation

(b) cost of production

(c) objectives of the firm

(d) competition

4. When a market has potential for growth, what is a better indicator of a firm’s effectiveness than
target return on investment?

(a) preventing competition

(b) price stabilization

(c) market share

(d) maximum profit

5. Skimming-the-cream pricing policy should not be adopted when _________

(a) the product is new and is a speciality product

(b) heavy expenses have been incurred on the development and introduction of the product

(c) demand is to be restricted to the level which can be easily met

(d) the demand for the product is highly elastic

6. Payment to salesman and advertising are examples of which type of cost?

(a) Fixed

(b) Semi-Variable

(c) Variable

(d) None of the above

7. ___________ is the amount of money needed to acquire some combination of goods and its
accompanying services.

(a) Cash flow

(b)Money

(c) Cash

(d)Price

8. The policy of charging very high price in the initial stages of the life of a product is called
_________________________

(a) Skimming-the-Cream Price Policy

(b) Penetrating Price Policy

(c) Follow-the-Leader Price Policy

(d) Non-competitive Price Policy

9. Under this pricing policy, different customers are charged different prices:

(a) Skimming-the-cream

(b) Penetrating

(c) Follow-the-leader

(d) Discriminating
10. If one of the firms in an industry sets the price of the product and all other firms sell at the same
price, it will be called _______________

(a) Non-competitive price

(b) Option less price

(c) Follow-the-leader price

(d) Non-discriminatory price

11. A higher brand-value and better quality corresponds to a __________ in the market.

(a) higher product price

(b) lower product price

(c) highest product price

(d) lowest product price

12. When there is depression or negative sentiment due to __________ in market, price is also kept
low by firms.

(a) lack of capital

(b) lack of market

(c) lack of demand

(d) lack of supply

13. Too high or too low pricing of a product could mean lost _________ for the organisation.

(a) income

(b) capital

(c) revenue

(d) sales

14. _____________ means the creating resources for either self - development or reinvestment in
the firm. Prices are deliberately set high in certain cases to generate surplus for reinvestment in the
same firm or its sister concerns.

(a) Resource allocation

(b) Resource allocating

(c) Resource development

(d) Resource Mobilizing

15. Highly priced commodities generally witness a ___________ trend in comparison to moderately
priced goods.

(a) High

(b) Low

(c) Sluggish sale

(d)Low sale

16. __________________ is one of the most important elements of the marketing mix.

(a)Product

(b)Price

(c)Place

(d) Promotion

17. The term price denotes __________ of a product.

(a) product value

(b) value

(c) money value

(d) cash value

18. The ___________ element, concerned with the advertising and promotion of the firm’s product
leads to expenditure on different promotion and advertising media like TV& Radio advertising,
sample-promotion, etc

(a) Place

(b) Promotion

(c) advertising

(d) Price

19. __________ is the basic objective of any business.

(a) profit

(b) surfing

(c) production

(d) survival
20. The price represents cost of _____________.

(a) cost of product and sales

(b) cost of goods and services

(c) profit and marketing

(d) production and profit margin

21. ____________ as an objective is prevalent in industries that have a price leader.

(a) Place stabilization

(b) Promotion stabilization

(c) Promotion stability

(d) Price Stabilization

22. __________ is meaningful measure of success of a firm’s marketing strategy.

(a) customer survey

(b) Business share

(c) Market measurement

(d) Market Share

23. Prices are deliberately set high in certain cases to generate surplus for _________ in the same
firm or its sister concerns.

(a) investment

(b) income

(c) profit making

(d) reinvestment

24. Which of the following given statement is not an objective of pricing:

(a) To achieve target rate of return on invested capital

(b) To face competition

(c) To reduce the cost of raising capital

(d) To maintain or improve share of the market

25. Availability of quality goods at competitive price __________ social welfare in society.

(a) neutralizes

(b) minimizes

(c) maximizes

(d) minimize

26. Normally seen on Liberty shoes, price tag shows that the selling price of the pair is Rs.699 or
Rs.799 or so. Identify the pricing method adopted by Liberty shoes Ltd. as discussed.

a) Psychological pricing

b) Leader pricing

c) Premium pricing

d) Price lining

27. What price will be fixed for a product having more features and attributes?

a) Higher

b) Lower

c) Moderate

d) Profit maximization

28. X Beauty Salon charges a higher price for its services like haircut, manicure, facial, pedicure etc.
but charges a lower price for a package including all these services. Identify the pricing policy.

a) Psychological Pricing

b) Leader Pricing

c) Team Pricing

d) Individual Pricing

29. Coffee is priced differently by different hotels because buyers assign some values to each. This is
an example of____________

a) Perceived value pricing

b) Differential pricing

c) Competition oriented pricing

d) Skimming pricing
30. All of the following are true about price except:

(a) Price is independent of the other elements of the marketing mix

(b) Price is the monetary value of a product

(c) Price is most flexible tool in the marketing mix

(d) Price is marketing mix element which produces revenue

31. Adding a standard profit to the cost of the product refers to.

a) Premium pricing

b) Price elasticity

c) Break-even price

d) Cost-plus pricing

32. _______________ price policies are considered when substitute products are marketed.

a) Marketing Skills

b) Elasticities

c) Market Skimming

d) Market Penetration

33. The price setting method which most closely corresponds to the concept of product positioning
is:

a) Cost-Plus Pricing

b) Going rate pricing

c) Perceived Value Pricing

d) Psychological Pricing

34. ABC Ltd. Company, manufacturer of electronic appliances entered into a formal agreement with
the distributors of products, not to sell below the fixed price in any situation. Identify the concept of
pricing stated here.

a) Premium pricing

b) Price elasticity

c) Break-even price

d) Resale Price Maintenance

Answers:
1. (a) Loss Leaders
2. (d) Demand-oriented pricing
3. (d) competition
4. (c) market share
5. (d) the demand for the product is highly elastic
6. (c) Variable
7. (d) Price
8. (a) Skimming-the-Cream Price Policy
9. (d) Discriminating
10. (c) Follow-the-leader price
11. (a) higher product price
12. (c) lack of demand
13. (d) sales
14. (d) Resource Mobilizing
15. (c) Sluggish sale
16. (b) Price
17. (c) money value
18. (b) Promotion
19. (d) survival
20. (d) production and profit margin
21. (d) Price Stabilization
22. (d) Market Share
23. (d) reinvestment
24. (c) To reduce the cost of raising capital
25. (c) maximizes
26. a) Psychological pricing
27. a) Higher
28. c) Team Pricing
29. a) Perceived value pricing
30. (a) Price is independent of the other elements of the marketing mix
31. d) Cost-plus pricing
32. d) Market Penetration
33. c) Perceived Value Pricing
34. Resale Price Maintenance

II. FILL IN THE BLANKS

1. Team pricing is the type of pricing companies sell a package or set of goods or services for a lower
price than they would charge if the customer buys all of them separately.

2. Everyday low pricing is where sellers determine price of the product according to everyday
demand and supply.

3. Pricing Lining is used extensively by retailers.

4. Discrimination or Dual Pricing is a pricing method where a firm will charge different prices from
different customers according to their ability to pay.
 5. The seller may charge higher prices during the initial stages of the product life- that is, during the
introduction of the new product in market. This type of pricing is called as Market Skimming Pricing.

6. Skimming involves setting a very high price for a new product initially and to reduce the price
gradually as competitors enter the market.

7. Perceived value pricing uses buyers‟ perception of value and not the sellers cost as the key to
pricing.

8. When customer demand sets up the price of a product in the market, it is called Demand oriented
pricing.

9. During a boom-period in the economy, when market conditions are favourable due to bullish
attitude or inflationary trend, firms can afford to fix higher prices of their products.

10. Price being an important element of the marketing-mix must be coordinated with the other
elements- product, place, and promotion.

11. Price has an important bearing on the firm’s financial goals, i.e. Revenue and Profit.

12. Pricing Policy of a firm is a major determinant of a firm’s success as it affects the firm’s
competitive position and share in the market.

13. Price Stabilization is an objective is prevalent in industries that have a price leader.

14. Market share is meaningful measure of success of a firm’s marketing strategy.

15. Too high or too low pricing of a product could mean lost sales for the organisation.

16. The term price denotes money value of a product.

17. Right price denotes the level of price which can cover all these expenditures on the final product
and brings some profit to the firm

18. Team Pricing is also called as product bundling.

19. Everyday low pricing is followed generally in case of perishable goods.

20. Resale Price Maintenance pricing considers three parties, the manufacturer, the distributor of
the manufacturers and the consumer.

21. Price lining simplifies pricing decisions in the future as retail prices are already set.

22. Customary Pricing and Price Lining are examples of psychological pricing.

23. Odd Pricing is also a form of psychological pricing, whereby prices are set at odd numbers such
as Rs. 99, Rs. 149, Rs. 990 which makes the customers falsely believe that they’re paying a lesser
price.

24. In Leader pricing, the prices of one or a few items may be cut temporarily to attract customers.
Such products are called “loss leaders”.

25. Premium pricing or Prestige pricing can give rich dividend when buyers are not price-conscious
and are willing to pay a higher price for a better product.

26. In Discrimination or Dual Pricing method, a firm will charge different prices from different
customers according to their ability to pay.
27. In case of variable-price policy, the seller sells similar quantities to similar buyers at different
price.

Case Based Questions

1. A simple jewellery store in the Chandni Chowk market of Delhi will set price of its ornaments
based on cost of gold/silver and making charges (cost of labour for making a particular piece
of jewellery). But a high-end jewellery store such as Kalyan Jewellers or Tanishq will price
similar ornaments at a much higher price owing to its brand-value and reputation in the
market. Identify the aspect of production highlighted in the above given case.

2. Rakesh and his friends decided to take their families to the newly launched restaurant in
their locality. He decided to check the menu online. While doing so he noticed that the price
of a cup of coffee was relatively higher as compared to their regular restaurant. Rakesh
informed his friends that the place is too expensive as compared to their regular restaurants.
Identify and explain the demand-based method of pricing given in the above scenario.

3. Airtel initially kept high prices for its mobile services, but by entry of Vodafone, Idea and
reliance, Jio the prices for various mobile services have been slashed. Identify and explain
the type of cost-oriented pricing.

Answers:
1. Brand and quality of product
2. Perceived pricing
3. Competition-oriented pricing or market driven pricing

Subjective Questions:
1. What do you understand by Market skimming pricing?

2.“If prices are too high, the business is lost. If prices are too low, the firm may be lost.” Comment on
the statement.

3.Which aspects related to production a business should consider, while setting price of a product?

4. What is sealed bid pricing?

5.What is meant by internal factors affecting price of a product?

6.How does price determine firm’s Competitive Position and Market share?

7.How does pricing help in improving company’s image?

8. If Fixed expenses in a production unit are Rs. 45,000, variable cost per unit is Rs. 25 and selling
price per unit is Rs.30; find out BEP quantity. What should be the selling price if Break-even output is
brought down to 7,000 units?

9.How is pricing significant for a firm? Discuss.

10.Pricing is important for consumers in decision making. Explain how?

11. How does pricing maximizes social welfare in society?

12. Discuss the concept of penetration pricing with an example

13.What do you understand by external factors affecting price of a product?

14. Discuss the role of top management in price-determination

15.Differentiate Cost plus Pricing and Mark-up Pricing

16.Discuss Competition-oriented pricing with an example.

17.Explain Break-even Pricing.

18.Why is pricing an important element in marketing mix? Explain briefly.

19. Differentiate leader pricing & psychological pricing.

20. While deciding the most crucial element of marketing mix, the business is required take into
account various aspects of production. Enlist and Explain them in brief?

21. Discuss the factors of the pricing method where intensity of the demand for the product would
be different.

22. List any four grounds on the basis of which price discrimination occurs. Illustrate each with the
help of an example.

Ans:

Discriminatory Pricing: It implies that a firm sells the same product service at two or more prices
that do not reflect a proportional difference in costs. Price discrimination occurs in many forms.

 Discrimination on the basis of customer segment-the product / service is sold different

prices to different customer groups, e.g. Indian Railway charges lower fare for students.
 Discrimination on the basis of product form-different version of the same product are sold
at different places. Based on image differences, e.g. a company may sell two varieties of a
bathing soap Rs.2 and Rs 50 respectively, through the difference in their cost of Rs 10 only.
 Locational discrimination-the product is sold at different prices at two places even though
the cost is the same at both the places, e. g. a cinema theatre charges different prices for
seats close to the screen and higher for the seats located far off i.e different for ground floor
and balcony seats.
 Time discrimination-Prices differ according to the season or time of the day. Public utilities
like taxi charge higher rate at night. Similarly, 5-star hotels charge a lower price for their
rooms during off-season
 Image discrimination-the same product is priced at different levels on the basis of
difference in image, e.g. a perfume company may price its perfume @ 500 Rs each in an
ordinary bottle and 799Rs in a fancy bottle with a different name and image.