When a Company Sets a Low Price for a New

question 40

Multiple Choice

When a company sets a low price for a new product to discourage competition from entering the market,it is using the _____ strategy.

• A)even/odd pricing
• B)price skimming
• C)psychological pricing
• D)penetration pricing
• E)symbolic pricing

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Definitions:

Cash Discounts

Cash discounts are reductions in the price of goods or services offered to buyers as an incentive for early payment.

Contra-Revenue Account

An account that is deducted from gross revenue to determine net revenue, such as sales returns, allowances, and discounts.

Income Statement

A financial statement that shows a company's financial performance, including revenues, expenses, and profits over a specific period.

Current Liability

Obligations or debts that a company must pay within a year from the date of the balance sheet.