American Girl Doll: The American Girl catalog began as a concept to introduce today's girls to those who lived in the past. Each historically accurate doll is carefully crafted and dressed and has books to describe her life. For example, Kristen is an 1854 pioneer girl who is growing up in Minnesota.
Her story begins with her long sea voyage from Sweden. The basic doll, dressed in a calico dress and striped apron plus the hardcover story of how she got to Minnesota, costs $90.00. Six more hardback books of Kristen's life are available for $74.95. Kristen's nightgown costs $20.00, and a matching one for the doll owner is an additional $38.00. Buy both together and the price is only $50.00. A hand- painted wooden bed and trunk for Kristen are available for $213.00. Shipping costs vary with the price of the merchandise ordered.
- Refer to American Girl Doll. American Girl is the primary seller of historically accurate dolls with accompanying books in a market where there is very little competition. It has no cash flow problems and is not interested in maximizing its sales. From this information, you should know American Girl has ___ pricing objectives.
a. status quo
b. psychological
c. profit-oriented
d. sales-oriented
e. supply-derived
ANSWER: c
- Refer to American Girl Doll. The popularity of the American Girl dolls is so great that an increase in the price of the basic Kristen doll and books by 5 percent will not significantly affect the demand for the product. The means that the demand for the American Girl doll is:
a. elastic.
b. derived.
c. a multiplier.
d. inelastic.
e. symmetrical.
ANSWER: d
- Refer to American Girl Doll. Based on the information in the narrative, which of the following factors is most likely to affect the elasticity of demand for the doll?
a. The absence of substitutes
b. The existence of complementary products
c. The price relative to purchasing power
d. Product durability
e. A variety of alternative uses for the product
ANSWER: a
- Refer to American Girl Doll. In terms of the costs of producing the doll and its accessories, the salary of the graphic designer who does the layout for the American Girl catalog is a(n):
a. markup cost.
b. variable cost.
c. fixed cost.
d. derived cost.
e. elastic cost.
ANSWER: c
- Refer to American Girl Doll. In terms of producing the doll and its accessories, the calico fabric used to make Kristen's dress is an example of a(n):
a. markup cost.
b. variable cost.
c. fixed cost.
d. derived cost.
e. elastic cost.
ANSWER: b
- Refer to American Girl Doll. You can buy a doll at Walmart for $5.99. The high price of the American Girl doll is used to promote a high-quality image. American Girl uses a ___ pricing strategy.
a. markup
b. demand-based
c. prestige
d. penetration
e. supply-derived
ANSWER: c