Revenue Management in the Lodging Industry, Exams of Public Health

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which of the following terms would be included in the placeportion of a hotel's marketing mix?

-advertising -product enhancements -distribution channels -promotions - ANSWER--distribution channels what is the fundamental assumption upon which the law of supplyis based?

-the higher the demand for a product the less of it will beproduced by sellers

-the higher the demand for a product the more of it will beproduced by sellers

-the lower the demand for a product the more of it will be produced by sellers

-the demand for a product does not affect its supply - ANSWER--the higher the demand for a product the more of it will be produced by sellers according to Alfred Marshall's work, if the price of a product is lower than the natural, or equilibrium price, what will happen?

-a surplus will occur -the demand for the product would exceed its supply -the supply of the product would exceed its demand -excess capacity would create constrained supply - ANSWER--the demand for the product would exceed its supply

Assume an equilibrium price (P1) is in place for a product. What would the law of supply and demand predict as an outcome if demand for that product increased? -the new price (P2) would be higher than the previous price (P1)and supply would decrease

-the new price (P2) would be lower than the previous price (P1)

because supply would decrease -the new price (P2) would be higher than the previous price (P1)and supply would increase -the new price (P2) would be lower than the previous price (P1)because supply would increase - ANSWER--the new price (P2) would be higher than the previous price (P1) and supply would increase

what concept is displayed by the intersecting point on a supplyand demand curve?

-the maximum price that should be charged for a product at a specific point in time

-an estimate of the price an average customer is willing to pay fora product

-an estimate of the amount of a product that would be purchased at a known price and point in time

-the maximum price customers would willingly pay for a productif there were no shortage of it - ANSWER--an estimate of the amount of a product that would be purchased at a known priceand point in time

what must be true if a product producer is to continue creating and

selling products? -revenues must exceed costs -costs must exceed profits -profit must exceed costs -costs must exceed revenue - ANSWER--revenues must exceedcosts

what is the specialized branch of accounting that focuses onrecording and analyzing the expenses incurred by an organization? -tax accounting -financial accounting -managerial accounting -cost accounting - ANSWER--cost accounting what is the industry term for the point at which an organization's revenues exactly equal its costs?

-midpoint -break-even point -equilibrium point

-equal capacity point - ANSWER--break-even point which of the following food service costs is a variable cost? -food -equipment rental -insurance -interest on debt - ANSWER--food which of the following lodging costs is a fixed cost? -room supplies

-franchiser reservation fees -mortgage payments -housekeeper wages - ANSWER--mortgage payments

in a hospitality industry break-even analysis graph the totalrevenues line starts at

1. Why does the total costs line always start farther up the y axis? -because variable costs are incurred even if no guests are servedor rooms are sold

-because fixed costs are always higher than variable costs -because fixed costs less variable costs must always be greaterthan 0

-because fixed costs are incurred even if no guests are served orrooms are sold - ANSWER--because fixed costs are incurred even if no guests are served or rooms are sold which of the following statements about unit costs in thehospitality industry is true?

-unit costs are unaffected by an item's selling price -unit costs will vary based upon how high or low an item is priced -selling prices must equal unit costs -unit costs cannot be lower than the unit's selling price - ANSWER--unit costs will vary based upon how high or low an item is priced which of the following statements about the relationship betweencosts and pricing is true?

-an appropriate selling price for a product or service must be dictated by its total costs

-an appropriate selling price for a product or service must dictateits allowable costs

-allowable costs must be determined before an appropriate selling price is established

-an increase in a product's cost must dictate an equal or greaterincrease in that product's selling price - ANSWER--an appropriate selling price for a product or service must dictate its allowablecosts

If a Revenue Manager implements an organization s strategic pricing plan what personal characteristic of that Revenue Manager will be most important for ensuring the plan s success? -training in accounting -experience in marketing -an understanding of algebraic formulas -an understanding of an organization's customers - ANSWER--anunderstanding of an organization's customers

Which formula represents a buyer's view of a sales transaction? Costs - Selling price = Personal Profit Selling Price - Perceived Value = Personal Profit Selling Price - Costs = Personal Profit Perceived Value - Selling Price = Personal Profit - ANSWER--perceived value - selling price = personal profit

What type of benefit is lacking in material qualities and is not able to be touched or seen but nonetheless can still be perceived?

Intangible Fringe Tangible Material - ANSWER--intangible What will be the typical case in an auction when the initial pricebid for the item being sold is very low?

The number of potential bidders will be low The number of potential bidders will be high The number of potential bidders will increase as price increases The number of potential bidders will decline - ANSWER--thenumber of potential bidders will be high

Penny Larson is travelling to San Francisco for a personalvacation. Which of economist Milton Friedman's buyer value formulas would apply to her purchase of the hotel rooms she will need during her trip?

Spending someone else's money on herself Spending her own money on someone else Spending her own money on herself Spending someone else's money on someone else - ANSWER-- spending her own money on herself

Penny Larson is travelling to San Francisco on business. Hercompany will reimburse 100% of her travel expense. Which of economist Milton Friedman's buyer value formulas would applyto her purchase of the hotel rooms she will need during her trip?

Spending someone else's money on herself Spending her own money on someone else Spending her own money on herself Spending someone else's money on someone else - ANSWER--spending someone else's money on herself

Penny Larson is buying a $100.00 restaurant gift card as a present for her niece who is graduating from hospitality management school. Which of economist Milton Friedman's buyer value

formulas would apply to her purchase? Spending someone else's money on someone else Spending her own money on herself Spending her own money on someone else Spending someone else's money on herself - ANSWER--spendingher own money on someone else

Penny Larson is a travel agent arranging a one-week SanFrancisco vacation for Mr. and Mrs. Rafael Ochoa. Which of economist Milton Friedman's buyer value formulas would apply to her purchase of the hotel rooms the Ochoa's will need during their trip? Spending someone else's money on someone else Spending her own money on herself Spending her own money on someone else Spending someone else's money on herself - ANSWER--spendingsomeone else's money on someone else What special challenge do buyers of hospitality products such as

hotel guestrooms or restaurant meals face? Difficulty in price determination prior to purchase Difficulty in quantity selection prior to purchase Difficulty in payment terms determination prior to purchase Difficulty in quality evaluation prior to purchase - ANSWER--difficulty in quality evaluation prior to purchase

If quantity and quality are held constant how will a reduction in price affect buyers' perceptions of value?

Perceived value will decrease Perceived value will increase Perceived value will not change Perceived value will decrease in the short run but rise in the longrun - ANSWER- -perceived value will increase If quantity and price are held constant how will reductions in product or service quality affect buyers' perceptions of value?

Perceived value will increase Perceived value will decrease Perceived value will not change Perceived value will decrease in the short run but rise in the longrun - ANSWER- -perceived value will decrease Which of the Four I's of service refers to the fact that the quality of service often depends upon the skill level of the individual who supplies it? Intangibility Inseparability Inventory Inconsistency - ANSWER--inconsistency Which of the Four I's of service refers to the fact that services most often cannot be held, touched, or even seen before they are purchased?

Intangibility Inseparability Inventory Inconsistency - ANSWER--intangibility Ahmed is the sole waitperson on duty at the Athenian restaurantduring the very slow 2:00 p.m. to 4:00 p.m. time period. Which of the Four I's of service refers to the fact that employees such as Ahmed must be scheduled to work anytime a service business is open and regardless of low volume levels? Intangibility Inseparability Inventory Inconsistency - ANSWER--inventory Which of the Four I's of service refers to the tendency of consumers to equate the quality of service provided with the attitude of the person who actually provides the service?

Intangibility Inseparability Inventory Inconsistency - ANSWER--inseparability Which of the Four I's of service addresses the fact that a hotelroom that goes unsold on a specific night cannot be discounted and offered for sale the next day? Intangibility Inseparability Inventory Inconsistency - ANSWER--inventory Randall is the revenue manager for a franchisee who owns a fiveunit quick service restaurant company. Which feature would be the easiest for Randall to change if he sought to increase the value his company provides its customers?

The quality of food products offered for sale The quality of service offered The quality of beverage products offered for sale The customer seating capacity available - ANSWER--the qualityof service offered

What is the most common guest complaint about hotel guestrooms?

Service deficiencies Excessive age Room size deficiencies Room locations - ANSWER--service deficiencies What is the most common guest complaint in the food serviceindustry?

Food and/or beverage quality

Seating location Service quality Menu prices - ANSWER--service quality Consider the formula: (A + B) - C = DWhere: A = Perceived tangible product benefit B = Perceived intangible service benefitC = Price D = ValueIf all other variables are held constant, which statement is also true? As A increases, D decreases As B decreases, D increases As A and B increase, D decreases

As C decreases, D increases - ANSWER--as C decreases, Dincreases

Which two factors do successful revenue managers employ when they devise and implement strategic pricing plans?

Intuition and insight Probability theory and basic calculus Data management and probability theory Data management and insight - ANSWER--data management andinsight

Which statement about revenue management in the hospitalityindustry is true?

Its focus should be on costs, not customers Those who implement it must have advanced training in statisticalanalysis

It is best understood by experienced hospitality managers Its effective implementation requires intuition rather than dataanalysis - ANSWER--it is best understood by experienced hospitality managers What is value-based pricing?

A pricing system based upon a seller's view of product or service value

A pricing system based upon a buyer's view of product or servicevalue

A pricing system based upon the value of the sum of costs incurred by a seller

A pricing system based upon the total amount of profit needed tomaintain an ongoing business - ANSWER--a pricing system based upon a buyer's view of product or service value All except one of the following pricing systems are marketing-based. Which one is not an example of marketing-based pricing?

Return on Investment (ROI) pricing Penetration pricing Loss leader pricing Competitive pricing - ANSWER--return on investment (ROI)pricing

What is the term used to describe a pricing system in which all

customers are charged the same price at all times? Demand-based pricing Value-based pricing Segmented pricing Fixed pricing - ANSWER--fixed pricing What is true for franchised hotel operations in the United States? Their prices are established by the hotel's brand managers Their prices are established by the hotel owners Their prices are established by their franchisers Their prices are established by their franchiser advisory committees - ANSWER--their prices areestablished by the hotel's brand managers

What is the economic term used to describe the difference between what a consumer is charged for a product or service and

the price that consumer would willingly pay for it? Consumer surplus Consumer rationality Buyer's remorse Value - ANSWER--consumer surplus What is the relationship between differential pricing andconsumer surplus?

Differential pricing is a strategy used by sellers to maximizeconsumer surplus

Consumer surplus prevents the effective use of differential pricing Consumer surplus mandates the use of differential pricing Differential pricing is a strategy used by sellers to minimizeconsumer surplus - ANSWER--differential pricing is a strategy used by sellers to minimize consumer surplus Which course of action would be most beneficial to the profit generating ability of a revenue manager's business?

Consumer surplus is maximized The majority of any consumer surplus is captured byintermediaries

The majority of any consumer surplus is captured by the business The majority of any consumer surplus is retained by the business'scustomers. - ANSWER--the majority of any consumer surplus is captured by the business Hottickets.com is a web-based business that buys popular concert tickets in bulk. It buys the tickets at a low price because it qualifies for group ticket discounts offered by concert promoters.Hotticket.com then marks up and immediately resells the tickets it has purchased to interested individuals who visit the Hotticketwebsite. What is the name of the activity Hottickets.com is engaging in? Arbitrage Commoditization

Consumer surplus staging

Articles of trade - ANSWER--arbitrage What is the purpose of a price fence or barrier? To determine the optimum price at which to sell a product orservice

To minimize the sale of low priced products or services To establish the actual amount of available product inventory To identify who is and who is not eligible for a special pricing offer - ANSWER-- to identify who is and who is not eligible for a special pricing offer Which differential pricing strategy would in most cases be illegalor unethical if implemented?

Pricing based on the age of the buyer Pricing based on the occupation of the buyer Pricing based on the ethnicity of the buyer Pricing based upon the location at which the buyer makes a

purchase - ANSWER- -pricing based on the ethnicity of the buyer

The use of a formal customer rewards program is an example ofwhat type of differential pricing strategy?

Pricing based on distribution channel Pricing based on customer characteristic Pricing based on product versioning Pricing based on payment terms - ANSWER--pricing based on customer characterstic

The requirement that a buyer present a coupon at the time ofpurchase is an example of what type differential pricing strategy?

Pricing based on distribution channel Pricing based on customer characteristic Pricing based on product versioning Pricing based on payment terms - ANSWER--pricing based on customer characteristic

The premium prices charged for dinner served at the restaurant LeJules Vernes on the second level of the Eiffel Tower in Paris, France can be attributed, in part, to which type of differentialpricing strategy?

Pricing based on location Pricing based on time Pricing based on product versioning Pricing based on bundling - ANSWER--pricing based on location A business hotel's promotion targeting local area residence anddesigned to offer them significantly reduced room rates on Sunday nights is an example of which type of differential pricingstrategy?

Pricing based on location Pricing based on bundling

Pricing based on product versioning