When There Is a Shortage of a Product in an Unregulated

question 216

Multiple Choice

When there is a shortage of a product in an unregulated market, there is a tendency for

• A) price to rise.
• B) price to fall.
• C) quantity demanded to increase.
• D) quantity supplied to decrease.

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Definitions:

Skimming Pricing Policy

A pricing strategy in which a company sets relatively high prices at the launch of a new product to maximize profit margins from customers willing to pay the premium price.

Price-sensitive

Refers to how demand for a product is influenced by changes in its price; price-sensitive consumers are likely to change their purchasing behaviors significantly in response to price changes.

High Initial Price

A pricing strategy where a product is introduced to the market at a high price point to maximize revenue from less price-sensitive customers before possibly lowering the price.

Skimming Pricing

A pricing strategy involving setting high prices initially to target consumers who are willing to pay more for new or unique products.