A Firm Introduces a Totally New Product

question 211

Multiple Choice

A firm introduces a totally new product.Knowing that it must bring in revenues to cover the costs of developing and promoting this new product,the firm decides to sell the product at a very high price.This practice is referred to as ________.

• A) penetration pricing
• B) introductory pricing
• C) price skimming
• D) price lining

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Definitions:

Capital Balances

Refers to the amounts recorded in the equity section of a company's balance sheet, representing the funds contributed by owners plus retained earnings.

Income Ratio

A financial metric used to evaluate a company's profitability by comparing its income to another metric, such as sales or assets, to assess efficiency and performance.

Capital Balance

Capital balance represents the amount of money that stakeholders have invested in a company. This can also refer to the amount of equity a company has.

Replacement Cost

The cost to replace an asset with another of similar function and quality in current market conditions.