A Penetration Pricing Policy Is Most Likely to Be Effective

question 310

Multiple Choice

A penetration pricing policy is most likely to be effective when

• A)lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost.
• B)the high initial price will not attract competitors.
• C)a low initial price discourages competitors from entering the market.
• D)customers interpret the high price as signifying high quality.
• E)enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable.

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Definitions:

Table

A method for organizing data in rows and columns to facilitate analysis and representation.

Probabilities

A calculation that determines the chances of an event occurring, with values between 0 and 1 to signify probability.

t-Table

A table used in statistics that shows the critical values of the t-distribution, used in hypothesis testing and constructing confidence intervals.

Degrees of Freedom

The number of independent values or quantities that can vary in an analysis without violating any constraints.