Which of the Following Statements About a Free Pricing Strategy

question 40

Multiple Choice

Which of the following statements about a free pricing strategy is false?

• A) Free products and services can knock out potential and actual competitors.
• B) The free pricing strategy was born in the early days of the Web.
• C) It is difficult to convert free customers into paying customers.
• D) Free products and services can help build market awareness.

---

Definitions:

Indirect Costs

Costs that cannot be directly linked to the production or sale of a specific product or service, such as administration, rent, and utilities.

Manufacturing Overhead

All indirect costs associated with manufacturing beyond direct materials and direct labor, such as utilities and maintenance.

Variable Costs

Costs that vary directly with the level of production or sales volume.

Fixed Costs

Fixed expenses unaffected by production or sales volumes, like rent, salaries, and insurance premiums.