Smelly Fruit: At first glance, there is little to like about the durian. The durian is a fruit popular in Thailand that is spiky outside and stinky on the inside.
When confronted with the durian for the first time, the Wall Street Journal recently reported that westerners often describe its distinctive sulphurous smell with words like stinky socks and manure.
However, the durian is so popular in Thailand that one variety of the durian fruit, called the Kan Yao, has been selling for as high as $200. Even at that price, supply of the Kan Yao cannot keep up with demand. There are approximately 30 varieties of the durian grown in Thailand, with the most plentiful selling in the $15 range. The yellow flesh of the durian, the part you eat, has very powerful smell but possesses a sweet, nutty taste that Thais cannot seem to get enough of at any price.
- Refer to Smelly Fruit. Suppose that a Thai farmer sells ten Kan Yao durians in the marketplace at the going rate of $200 each. If it cost a Thai farmer $125 to produce and market the Kan Yao durian that she has sold, the difference between these two numbers ($75), times the number sold (ten), represents the farmer's:
a. ROI
b. revenue
c. profit
d. returns
e. COGS
ANSWER: c
- Refer to Smelly Fruit. Suppose that you have decided to buy land in Thailand and become a durian producer. You see that the customary price for a Kan Yao is $200, so that is the price you decide to charge for your durian crop. This suggests you are using a ___ approach to setting your price.
a. profit maximization
b. market share
c. return on investment (ROI)
d. sales maximization
e. status quo
ANSWER: e
- Refer to Smelly Fruit. At $200 per Kan Yao, demand for the fruit appears to be higher than supply. Suppose that at a price of $225, the amount demanded exactly meets the amount farmers are willing and able to supply. In this case, the $225 price would be considered the ___ price.
a. price equilibrium
b. sales maximization
c. profit maximization
d. ROI maximization
e. yield management
ANSWER: a
- Refer to Smelly Fruit. Over the past two years, the price for Kan Yao durian fruit has increased by 50 percent. If the amount sold has remained almost constant, we would say that demand is:
a. elastic
b. inelastic
c. unitary
d. highly elastic
e. moderately elastic
ANSWER: b
- Refer to Smelly Fruit. The durian fruit is a unique product. To many people in Thailand, no other fruit tastes or smells anything like the durian. Its uniqueness, in the eyes of the customer, would tend to have which of the following?
a. It would have little effect.
b. It would tend to make the durian more price elastic.
c. It would tend to make the durian more price inelastic.
d. It would tend to raise the price in comparison to purchasing power.
e. It would tend to impact the durian's stage in the PLC.
ANSWER: c
Learn More :
Marketing Chapter 20
- If an online retailer lists shipping charges according to the dollar amount of merchandise purchased, you know that it is using _____ pricing.
- A(n) _____ discount is a deduction from list prices that applies to the buyer's total purchases made during a specific period and is intended to encourage customer loyalty.
- Home Depot's fall lawn mower sale is an example of which of the following pricing tactics?
- Which type of discount is a price reduction offered to a consumer, an industrial user, or a marketing intermediary in return for prompt payment of a bill?
- "The unregulated financial derivatives market created a shadow banking system that performed some of the same functions as the real banking systemlong dash—but without the checks and balances that keep a banking system from spinning out of control." Which of the following lessons BEST supports this comment?
- What will the Dodddash-Frank bill do to ensure transparency in markets, hedge funds, and other financial products?
- What is the goal of the Volcker Rule in Dodddash-Frank?
- What is the task of the Bureau of Consumer Financial Protection within the Federal Reserve?
- Which of the following was created to monitor systemic risks that might affect a significant portion of the economy?
- _____ was established in 2010 in order to restructure and improve the finance industry by better monitoring systematic risk, safeguarding consumers, and more effectively examining market fluctuations.
- In 2006, David had a very low credit score, insufficient income, and no collateral to offer for a loan. Yet, when he applied, he was approved by YourMoney Bank for a loan to buy a house. Which of the following describes this loan?
- When demand drives prices of an asset far beyond its intrinsic economic value, what has been created?
- All The Best Financial recently developed an investment product where different types of debts, such as mortgages, are assembled together. All The Best's investment product exemplifies which of the following?
- Adding to the housing bubble, lenders increased which of the following to determine how much of a loan a borrower could receive based on the home's value?
- A ________ is an extreme deficiency of assets within an area of the economy during which businesses are not able to obtain enough funding to meet their operating requirements.
- A(n) ______ offers variable interest rates mortgages to consumers by creating attractive introductory rates which later rise dramatically.
- Which of the following is the best type of institution to use to set up a scholarship fund or other type of philanthropic giving?
- Which of the following are also called savings and loan associations?
- NFP Financial is a not-for-profit, member-owned cooperative that offers deposit accounts and lending services to customers and small businesses. Which of the following best describes NFP?
- Which of the following established the Federal Deposit Insurance Corporation?
- Which of the following help lenders review the solvency of borrowers?
- ______ deal primarily with providing financial services to corporations in international matters.
- DidItMyself Tools is interested in entering the Chinese market for selling its products. Which type of bank would be most helpful to DidItMyself as it embarks on its first international operation?
- ABC Toys is interested in acquiring World Toys, both of which are located in the United States. Which type of bank should ABC use for help with this acquisition?
- Which of the following offer a full menu of client services with an international reach?