Which One of the Following Situations Best Demonstrates an Advantage

question 110

Multiple Choice

Which one of the following situations best demonstrates an advantage of price skimming?

• A) The low initial prices create an image of value for the customer.
• B) Prices are initially low to encourage customers to purchase the product.
• C) When the price is eventually lowered, consumers might think they are getting a bargain.
• D) It discourages competitors from entering the market.

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Definitions:

Future Cash Inflows

Projected incoming cash to a business from its operations, investments, or financing activities.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment’s cost.

Compound Interest

Interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan.

Desired Rate

The target interest rate set by an organization or individual for investment or financial returns, often guiding financial decisions and strategies.