Pricing for Marketing: Frameworks, Elasticity & Value-Based Pricing | 100+ MCQ with Answers
1. What makes pricing unique among the four Ps of marketing?
A. It is the easiest to change
B. It is the only P that directly generates revenue
C. It depends entirely on promotions
D. It is unrelated to customer value
✅ Answer: B. It is the only P that directly generates revenue
2. Why is pricing considered the “steering wheel” of a business?
A. It determines product features
B. It controls operational efficiency
C. It dictates how much value the firm captures
D. It measures customer satisfaction
✅ Answer: C. It dictates how much value the firm captures
3. Dynamic pricing models like Uber surge pricing primarily rely on:
A. Advertising budgets
B. Employee incentives
C. Real-time supply–demand data
D. Long-term brand loyalty
✅ Answer: C. Real-time supply–demand data
4. The concept of posted prices became more common due to:
A. Decrease in customer expectations
B. Rise of online shopping and standardization
C. Barter system returning
D. Declining competition
✅ Answer: B. Rise of online shopping and standardization
5. Pricing that adjusts based on technology and global competition is driven by:
A. Internal cost accounting
B. Market evolution
C. Random fluctuations
D. Employee preferences
✅ Answer: B. Market evolution
6. Which of the following is NOT a course objective in strategic pricing?
A. Understanding consumer psychology
B. Determining price metrics
C. Learning how to negotiate salaries
D. Exploring pricing approaches
✅ Answer: C. Learning how to negotiate salaries
7. A price is meaningless without considering:
A. Packaging design
B. Expected sales volume
C. The entrepreneur’s intuition
D. Competitor number
✅ Answer: B. Expected sales volume
8. A cost-plus price without demand estimation results in:
A. Accurate pricing
B. Meaningless price points
C. Guaranteed profitability
D. Automatic market share growth
✅ Answer: B. Meaningless price points
9. Customer value varies across:
A. Factories
B. Government policies
C. Segments
D. Accountants
✅ Answer: C. Segments
10. The demand curve shows the relationship between:
A. Total revenue and cost
B. Cost price and margin
C. Price and quantity demanded
D. WTP and reservation price
✅ Answer: C. Price and quantity demanded
11. Marginal cost refers to:
A. Cost of producing all units
B. Cost of producing one extra unit
C. Total cost minus sunk cost
D. Average fixed cost
✅ Answer: B. Cost of producing one extra unit
12. The profit function Ï€ = Q × (P – MC) is expressed in:
A. Two variables
B. One primary variable (price)
C. Four variables
D. No variables
✅ Answer: B. One primary variable (price)
13. Market equilibrium price is defined as:
A. Price customers negotiate
B. Price competitors set
C. Intersection of supply and demand
D. Maximum reservation price
✅ Answer: C. Intersection of supply and demand
14. Why is the supply curve often ignored in firm-level pricing?
A. It is mathematically complex
B. Firms don’t produce goods
C. Economies of scale contradict its assumptions
D. It only applies to services
✅ Answer: C. Economies of scale contradict its assumptions
15. Margin is calculated using:
A. Cost as denominator
B. Selling price as denominator
C. Purchase price as numerator
D. Both SP and cost
✅ Answer: B. Selling price as denominator
16. Markup is calculated using:
A. Selling price as denominator
B. Revenue as numerator
C. Cost price as denominator
D. Total fixed cost
✅ Answer: C. Cost price as denominator
17. Margin and markup differ in:
A. Currency amount
B. Percentage representation
C. Formula inputs
D. Cost calculations
✅ Answer: B. Percentage representation
18. Search cost refers to:
A. Retailer expense
B. Customer time and effort to find good deals
C. Production time
D. Advertising cost
✅ Answer: B. Customer time and effort to find good deals
19. Reservation price is defined as:
A. Lowest price a buyer wants
B. Budget allocated to shopping
C. Maximum amount a buyer will pay
D. Expected future price
✅ Answer: C. Maximum amount a buyer will pay
20. Transaction costs include all EXCEPT:
A. Travel cost
B. Switching cost
C. Borrowing interest
D. Product margin
✅ Answer: D. Product margin
21. The three lenses of pricing include all EXCEPT:
A. Economics
B. Customers
C. Competitors
D. Government taxation
✅ Answer: D. Government taxation
22. Price elasticity emerges at the overlap of:
A. Economics + Customers
B. Competitors + Government
C. Product + Place
D. Promotion + Segment
✅ Answer: A. Economics + Customers
23. Price discrimination takes place where:
A. Customers + Competitors overlap
B. Economics + Competitors overlap
C. Supply + Demand overlap
D. Margin + Markup overlap
✅ Answer: A. Customers + Competitors overlap
24. Game theory is relevant at the overlap of:
A. Customers + Promotion
B. Economics + Competitors
C. Competitors + Supply
D. Cost + Value
✅ Answer: B. Economics + Competitors
25. The P* (optimal price) lies at the intersection of:
A. Demand and competition only
B. All three lenses
C. Customers only
D. Competitors only
✅ Answer: B. All three lenses
26. Shared economies arise when:
A. Variable costs increase
B. Different customers share fixed costs
C. Prices increase due to inflation
D. Marketing costs decrease
✅ Answer: B. Different customers share fixed costs
27. Cross subsidization occurs when:
A. Products pay equal costs
B. One segment pays more so another pays less
C. All customers pay identical prices
D. Government funds the product
✅ Answer: B. One segment pays more so another pays less
28. Differential pricing means:
A. Different products, same price
B. Same product, different prices
C. Different competitors, same strategy
D. Same price across all markets
✅ Answer: B. Same product, different prices
29. Competitive pricing aims to:
A. Ignore competitors
B. Match product design
C. Exploit competitive dynamics
D. Avoid customer segments
✅ Answer: C. Exploit competitive dynamics
30. Product line pricing focuses on:
A. Selling a single product
B. Pricing related products to maximize value comparison
C. Eliminating low-end models
D. Increasing advertising spend
✅ Answer: B. Pricing related products to maximize value comparison
31. English auctions typically:
A. Start high and go low
B. Start low and go high
C. Have no bids
D. Hide all bids
✅ Answer: B. Start low and go high
32. In an English auction, one advantage to sellers is:
A. Emotional bidding may increase price
B. Bidders always underbid
C. Buyers pay only second-highest price
D. No need to monitor bids
✅ Answer: A. Emotional bidding may increase price
33. Dutch auctions start with:
A. Low price that increases
B. High price that decreases
C. Equal price for all
D. Secret bids
✅ Answer: B. High price that decreases
34. Second price sealed bid auctions ensure:
A. Bidders reveal true valuations
B. Sellers get guaranteed high profits
C. Buyers hide valuations
D. Market clears slowly
✅ Answer: A. Bidders reveal true valuations
35. Reverse auctions are common in:
A. Luxury retail
B. B2B procurement
C. Smartphone sales
D. Grocery shopping
✅ Answer: B. B2B procurement
36. Second market discounting requires:
A. No secondary market
B. High advertising spend
C. Unused capacity
D. Seasonal demand
✅ Answer: C. Unused capacity
37. Arbitrage must be avoided in second market discounting because:
A. It increases margins
B. It allows reselling at higher prices
C. It reduces fixed costs
D. It increases product value
✅ Answer: B. It allows reselling at higher prices
38. Periodic discounting captures revenue from:
A. Only low-WTP customers
B. Only high-WTP customers
C. Both high-WTP and low-WTP customers
D. Competitors
✅ Answer: C. Both high-WTP and low-WTP customers
39. Fussy customers typically:
A. Wait for discounts
B. Pay premium for early access
C. Avoid new products
D. Prefer low prices always
✅ Answer: B. Pay premium for early access
40. An example of periodic discounting is:
A. Train ticket surge
B. iPhone price drop after months
C. IPO book building
D. Airline dynamic fares
✅ Answer: B. iPhone price drop after months
41. Which pricing method reflects willingness to wait?
A. Second market discounting
B. Periodic discounting
C. Dumping
D. Cost-plus
✅ Answer: B. Periodic discounting
42. Second market discounting is commonly used in:
A. Premium-only brands
B. Market expansion to secondary geographies
C. Eliminating products
D. Loyalty rewards
✅ Answer: B. Market expansion to secondary geographies
43. Dumping refers to selling:
A. Cheaper abroad than in home market
B. At premium abroad
C. At cost price locally
D. Only in primary markets
✅ Answer: A. Cheaper abroad than in home market
44. One benefit of second price sealed bid auctions for sellers is:
A. Guaranteed high bids
B. Reveals true buyer valuation
C. Faster auction processing
D. Improved supply chain
✅ Answer: B. Reveals true buyer valuation
45. The key advantage of Dutch auctions for sellers is:
A. High competition
B. Appeals to risk-averse bidders who buy early
C. Fully emotional bidding
D. Hidden bids
✅ Answer: B. Appeals to risk-averse bidders who buy early
46. High variation in bidder valuations favors:
A. English auction
B. Second price sealed bid
C. First price sealed bid
D. Reverse auction
✅ Answer: C. First price sealed bid
47. Narrow variation in bidder valuations favors:
A. First price sealed bid
B. Second price sealed bid
C. Dutch auction
D. English auction
✅ Answer: B. Second price sealed bid
48. Which is a requirement for successful periodic discounting?
A. Perishable inventory only
B. Different willingness-to-wait across segments
C. Reverse auction support
D. High transaction costs
✅ Answer: B. Different willingness-to-wait across segments
49. Price elasticity measures:
A. Cost structure variation
B. How demand responds to price change
C. Total profit
D. Level of customer loyalty
✅ Answer: B. How demand responds to price change
50. Which principle is demonstrated when premium buyers fund discounts for later buyers?
A. Arbitrage
B. Cross subsidization
C. Reverse auction
D. Markup
✅ Answer: B. Cross subsidization
Q51. Which pricing orientation primarily focuses on customers’ willingness to pay?
A. Cost-plus pricing
B. Value-based pricing
C. Competition-based pricing
D. Markup pricing
✅ Answer: B. Value-based pricing
Q52. If a company sets a price high initially and lowers it later, it is using:
A. Penetration pricing
B. Skimming pricing
C. Prestige pricing
D. Freemium pricing
✅ Answer: B. Skimming pricing
Q53. Which factor is MOST important in determining price elasticity of demand?
A. Customer loyalty
B. Cost structure
C. Brand equity
D. Availability of substitutes
✅ Answer: D. Availability of substitutes
Q54. A firm using penetration pricing aims to achieve:
A. High initial margins
B. Rapid market share growth
C. Customer exclusivity
D. Exclusivity perception
✅ Answer: B. Rapid market share growth
Q55. Price discrimination relies on:
A. Uniform pricing across markets
B. Identifying customer segments with different willingness to pay
C. Adding product features
D. Increasing production cost
✅ Answer: B. Identifying customer segments with different willingness to pay
Q56. Psychological pricing works because customers:
A. Evaluate price rationally
B. Are influenced by reference points
C. Prefer even numbers
D. Compare total cost of ownership
✅ Answer: B. Are influenced by reference points
Q57. The “pricing waterfall” highlights:
A. Gross to net revenue leakage
B. Customer cost perception
C. Competing product strengths
D. Margin on incremental sales
✅ Answer: A. Gross to net revenue leakage
Q58. Surge pricing is enabled primarily by:
A. Economies of scale
B. Real-time data analytics
C. Traditional cost accounting
D. Break-even analysis
✅ Answer: B. Real-time data analytics
Q59. In B2B pricing, the most critical element is:
A. Advertising spend
B. Negotiation and discount structure
C. Retail branding
D. Celebrity endorsements
✅ Answer: B. Negotiation and discount structure
Q60. A company charging different prices at different times of the day uses:
A. Price anchoring
B. Time-based dynamic pricing
C. Skimming
D. Odd-even pricing
✅ Answer: B. Time-based dynamic pricing
Q61. A price that signals high quality to consumers is known as:
A. Reference price
B. Prestige price
C. Floor price
D. Loss leader price
✅ Answer: B. Prestige price
Q62. Break-even pricing focuses primarily on:
A. Customer emotions
B. Competitor actions
C. Covering fixed and variable costs
D. Brand loyalty
✅ Answer: C. Covering fixed and variable costs
Q63. An example of captive pricing is:
A. Discount on older products
B. Low price for printers but high price for cartridges
C. Premium smartphone pricing
D. Bundle discount on groceries
✅ Answer: B. Low price for printers but high price for cartridges
Q64. The floor of the pricing range is typically determined by:
A. Competiton
B. Customer demand
C. Cost
D. Brand strength
✅ Answer: C. Cost
Q65. The concept of “willingness to pay” is central to:
A. Economies of scale
B. Value-based pricing
C. Predatory pricing
D. Marginal cost pricing
✅ Answer: B. Value-based pricing
Q66. When customers perceive ₹999 as significantly cheaper than ₹1000, this is:
A. Reference pricing
B. Odd pricing
C. Skimming
D. Cost-plus
✅ Answer: B. Odd pricing
Q67. A firm lowers price to fight off a new entrant. This is an example of:
A. Penetration
B. Predatory pricing
C. Premium pricing
D. Freemium
✅ Answer: B. Predatory pricing
Q68. In strategic pricing, contribution margin is calculated as:
A. Price – Fixed cost
B. Price – Variable cost
C. Variable cost – Price
D. Price / Quantity
✅ Answer: B. Price – Variable cost
Q69. Bundling increases sales by:
A. Reducing cost of production
B. Offering perceived higher value
C. Eliminating competition
D. Increasing price transparency
✅ Answer: B. Offering perceived higher value
Q70. Surge pricing used by Uber is an example of:
A. Behavioural pricing
B. Dynamic pricing
C. Premium pricing
D. Odd-even pricing
✅ Answer: B. Dynamic pricing
Q71. Pricing power increases when:
A. Customer switching cost is low
B. Product has high differentiation
C. Competitors offer similar products
D. Supply exceeds demand
✅ Answer: B. Product has high differentiation
Q72. Which element of pricing is MOST influenced by behavioural economics?
A. Price floor
B. Reference pricing
C. Break-even pricing
D. Competitor-based pricing
✅ Answer: B. Reference pricing
Q73. A firm sets a low price for a basic product and high price for upgrades. This is:
A. Cost-plus pricing
B. Two-tier pricing
C. Auction pricing
D. Dynamic discounting
✅ Answer: B. Two-tier pricing
Q74. The optimal price is the price that maximizes:
A. Sales volume
B. Profit
C. Market share
D. Customer satisfaction
✅ Answer: B. Profit
Q75. Price elasticity measures:
A. Brand loyalty
B. Sensitivity of demand to price changes
C. Customer emotional response
D. Competitor actions
✅ Answer: B. Sensitivity of demand to price changes
Q76. A high elasticity (>1) indicates:
A. Demand is insensitive to price
B. Demand is highly sensitive to price
C. Demand is constant
D. No substitutes exist
✅ Answer: B. Demand is highly sensitive to price
Q77. Markup pricing is mainly used because it is:
A. Customer-oriented
B. Easy to calculate
C. Competitor-dependent
D. Behaviour-oriented
✅ Answer: B. Easy to calculate
Q78. When companies change prices frequently based on demand, supply, and time, they use:
A. Cost-plus pricing
B. Dynamic pricing
C. Target return pricing
D. Uniform pricing
✅ Answer: B. Dynamic pricing
Q79. Which pricing tactic drives higher sales through scarcity signals?
A. Cost-plus pricing
B. Limited-time discount
C. Premium pricing
D. Loss leader
✅ Answer: B. Limited-time discount
Q80. A product priced at ₹0 to attract users and later charge is an example of:
A. Skimming
B. Penetration
C. Freemium
D. Captive pricing
✅ Answer: C. Freemium
Q81. Profit maximization occurs where:
A. Marginal cost = average cost
B. Total cost = fixed cost
C. Marginal revenue = marginal cost
D. Price = marginal revenue
✅ Answer: C. Marginal revenue = marginal cost
Q82. A company offers a combined discount for buying two products together. This is:
A. Price skimming
B. Bundling
C. Captive pricing
D. Odd-even pricing
✅ Answer: B. Bundling
Q83. The primary disadvantage of promotions is:
A. Lower customer satisfaction
B. Higher long-term acquisition cost
C. Margin erosion
D. Increased production cost
✅ Answer: C. Margin erosion
Q84. Which pricing strategy works best for products with high fixed cost but low variable cost?
A. Premium pricing
B. Penetration pricing
C. Dynamic pricing
D. Loss-leader pricing
✅ Answer: B. Penetration pricing
Q85. If a brand maintains a high price to create exclusivity, it uses:
A. Cost-plus pricing
B. Value pricing
C. Prestige pricing
D. Penetration pricing
✅ Answer: C. Prestige pricing
Q86. Surge pricing increases efficiency by:
A. Decreasing supply
B. Reducing customer trust
C. Matching demand with supply
D. Making prices static
✅ Answer: C. Matching demand with supply
Q87. The “price ceiling” is determined by:
A. Cost of production
B. Customer willingness to pay
C. Competitor discounts
D. Advertising spend
✅ Answer: B. Customer willingness to pay
Q88. Which is LEAST relevant in value-based pricing?
A. Competitor discounts
B. Customer perceived value
C. Problem the product solves
D. Quantified value delivered
✅ Answer: A. Competitor discounts
Q89. A company losing money on one product to attract customers is using:
A. Loss leader pricing
B. Skimming
C. Premium pricing
D. Auction pricing
✅ Answer: A. Loss leader pricing
Q90. Subscription-based pricing works best when:
A. Costs are unpredictable
B. Customer lifetime value is high
C. Return rates are high
D. Switching cost is low
✅ Answer: B. Customer lifetime value is high
Q91. Consumer willingness to pay is most affected by:
A. Production cost
B. Reference price
C. Total revenue
D. Inventory turnover
✅ Answer: B. Reference price
Q92. Price anchoring works BEST when:
A. Prices are shown without comparisons
B. A high reference price is shown first
C. Competitors offer free products
D. Costs are transparent
✅ Answer: B. A high reference price is shown first
Q93. The main risk of competitor-based pricing is:
A. Overpricing
B. Underpricing
C. Ignoring value delivered
D. Failing to cover variable cost
✅ Answer: C. Ignoring value delivered
Q94. Target return pricing focuses on:
A. Achieving a specific profit percentage
B. Covering fixed cost
C. Customer demand
D. Behavioural psychology
✅ Answer: A. Achieving a specific profit percentage
Q95. If a retailer displays a “regular price” next to a “discounted price,” it uses:
A. Loss leader
B. Reference pricing
C. Auction pricing
D. Marginal pricing
✅ Answer: B. Reference pricing
Q96. Which pricing strategy helps reduce inventory quickly?
A. Premium pricing
B. Discount pricing
C. Skimming
D. Psychological pricing
✅ Answer: B. Discount pricing
Q97. The key driver of perceived fairness in pricing is:
A. Cost transparency
B. Distribution channels
C. Number of competitors
D. Advertising
✅ Answer: A. Cost transparency
Q98. Economies of scale allow firms to:
A. Charge lower prices profitably
B. Charge higher prices indefinitely
C. Increase fixed cost
D. Maintain static pricing
✅ Answer: A. Charge lower prices profitably
Q99. A company that adjusts price based on customer history uses:
A. Segment-based pricing
B. Personalized pricing
C. Versioned pricing
D. Captive pricing
✅ Answer: B. Personalized pricing
Q100. Customer surplus refers to:
A. Profit earned by the company
B. Value received – price paid
C. Price charged – cost
D. Inventory available
✅ Answer: B. Value received – price paid
Q101. Price localization is when companies adjust prices based on:
A. Product features
B. Regional income levels
C. Competitor size
D. Inventory capacity
✅ Answer: B. Regional income levels
Q102. The MOST important metric in price experimentation (A/B testing) is:
A. Cost
B. Conversion rate
C. Gross margin
D. Store traffic
✅ Answer: C. Gross margin
Q103. When a company sells multiple versions of a product at different prices, it uses:
A. Versioning
B. Captive pricing
C. Odd-even pricing
D. Skimming
✅ Answer: A. Versioning
Q104. A brand launches a premium line extension at a significantly higher price. This is:
A. Loss leader pricing
B. Image pricing
C. Penetration pricing
D. Predatory pricing
✅ Answer: B. Image pricing
strategic pricing, pricing strategies, MBA pricing model, IIM pricing notes, price elasticity, customer value pricing, competitive pricing, differential pricing, product line pricing, auction types pricing, Dutch auction, English auction, sealed bid auction, second market discounting, periodic discounting, shared economies, cross subsidies, price discrimination, pricing frameworks, pricing case studies, profit optimization, price metrics, pricing structure, willingness to pay, reservation price, search costs, pricing economics, marginal cost pricing, value-based pricing.
