Which of the Following Strategies Is Involved with Penetration Pricing

question 70

Multiple Choice

Which of the following strategies is involved with penetration pricing?

• A) setting an initial low price to establish a new product in the market
• B) setting an initial low price to cover new product costs and still generate a profit
• C) setting a limited number of prices for certain categories or products
• D) setting an initial high price to establish a new product in the market
• E) setting an initial high price to cover new product costs and still generate a profit

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Definitions:

Simple Interest

Simple interest is a method of calculating the interest charge on a loan based on the original principal balance without compounding.

Rate of Return

The financial improvement or decline in an investment across a particular period, indicated as a percentage of the investment’s entry cost.

Interest

The fee associated with the right to borrow funds, usually indicated as a yearly percentage rate.

Compounded Annually

This refers to the process of calculating interest on both the initial principal and the accumulated interest from previous periods on a yearly basis.