Why Do Firms Engage in Versioning When the Costs of Production

question 194

Multiple Choice

Why do firms engage in versioning when the costs of production differ little for different versions of the product?

• A) It is a form of price discrimination that allows the firm to earn more revenue and profit from its market situation.
• B) It is a lock-in strategy that allows a firm to retain customers over time.
• C) It tempts existing customers to buy multiple units of the product so that they can own every version.
• D) The firm will appear to be more dominant in this market if it produces several versions of its products.

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Definitions:

Fatty Plaque

Deposits of fat and other substances on the walls of arteries, leading to atherosclerosis and potentially heart disease or stroke.

Prolactin

A hormone produced by the pituitary gland that stimulates milk production and affects reproductive health.

Pituitary Gland

A small, pea-sized gland located at the base of the brain, responsible for regulating critical body functions through the release of hormones.

Milk Production

The biological process by which mammals produce milk to feed their young.