A Skimming Pricing Policy Is Likely to Be Most Effective

question 336

Multiple Choice

A skimming pricing policy is likely to be most effective when (1) __________; (2) the high initial price will not attract competitors; (3) lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost; and (4) customers interpret the high price as signifying high quality.

• A)consumers tend to be price-sensitive
• B)enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable
• C)it will be easier to set measurable sales unit goals
• D)a lower price will significantly reduce unit costs
• E)consumers perceive your product to be similar to other products in the market

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Definitions:

Carrying Value

The value of an asset listed in a company's financial records, determined by subtracting its accumulated depreciation from its initial purchase price.

Common Stock

Common stock represents ownership shares in a corporation, entitling holders to vote on corporate matters and potentially receive dividends.

Bond Indenture

A legal document that sets forth the terms of the bond issue.

Legal Document

A written instrument that formally expresses a legally enforceable act, process, or contractual duty, obligation, or right.