In Which of the Following Situations Would a Penetration Pricing

question 55

Multiple Choice

In which of the following situations would a penetration pricing strategy be inappropriate?

• A) Sales volume of the service is very sensitive to price
• B) Economies in unit costs can be achieved by operating at large volumes
• C) A service faces threats of strong potential competition very soon after introduction
• D) There is no class of buyers willing to pay a higher price to obtain the service
• E) The service is a major improvement over past services

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Definitions:

Classical Economists

Economists from the 18th and 19th centuries who believed in free markets, limited government intervention, and self-regulating economies.

Market Forces

The economic factors affecting the price, demand, and availability of goods and services in a market economy, primarily supply and demand.

Full Employment

A situation in which all available labor resources are being used in the most economically efficient way, typically characterized by the absence of cyclical unemployment.

Keynes

Refers to the economic theories and policies advocated by John Maynard Keynes, which emphasize government intervention to manage economic cycles and stimulate economy-wide demand.