Which of the Following Is a Major Disadvantage Associated with the Skimming

question 201

Multiple Choice

Which of the following is a major disadvantage associated with the skimming pricing strategy?

• A)It is not effective for higher-end goods.
• B)It is not effective in recovering the high research and development costs.
• C)It attracts competition as potential competitors enter into the market observing the high financial returns obtained by innovative firms.
• D)It leads to fulfillment problems if the demand for the product outstrips the firm's production capacity.

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Definitions:

World Price

The international market price of a commodity, determined by global supply and demand.

Per-Unit Tariff

A fixed fee charged by a government on a specific good imported into the country, assessed on a per unit basis.

Voluntary Export Restriction

A self-imposed limitation by exporting countries on the volume of their exports to another country, often to avoid stricter trade barriers.

Import Quota

A government-imposed limit on the quantity or value of goods that can be imported into a country, used to protect domestic industries from foreign competition.