Company a Uses a Pricing Approach Where the Initial Price

question 49

Multiple Choice

Company A uses a pricing approach where the initial price for a product is set high and then lowered, and Company B uses an approach where initial prices are set low in an effort to gain market share. What terms best describe these practices? $\begin{array} { | l | l | l | } \hline & \text { Company A } & \text { Company B } \\\hline 1 & \text { Predatory } & \text { Skimming } \\\hline 2 & \text { Penetration } & \text { Predatory } \\\hline 3 & \text { Skimming } & \text { Penetration } \\\hline 4 & \text { Skimming } & \text { Predatory } \\\hline 5 & \text { Predatory } & \text { Penetration } \\\hline\end{array}$

• A)1
• B)2
• C)3
• D)4
• E)5

---

Definitions:

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, resulting in market balance.

Shortage

A market condition characterized by the demand for a product exceeding its supply, often leading to increased prices.

Equilibrium Price

The price at which the quantity of a product offered for sale matches the quantity being demanded, resulting in no net surplus or shortage in the market.

Supply Curve

A graph that shows the relationship between the price of a good and the quantity supplied.