Several Factors Indicate That a Penetration Pricing Policy Would Most

question 295

Multiple Choice

Several factors indicate that a penetration pricing policy would most likely be effective when introducing a new product, including situations in which

• 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) customers interpret the high price as signifying high quality.
• D) enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable.
• E) many segments of the market are price-sensitive.

Analyze the difference in overhead allocation between traditional costing and ABC.

Understand and differentiate between traditional costing and activity-based costing methods.

Calculate unit product costs using traditional costing method.

Calculate unit product costs using activity-based costing (ABC) method.

---

Definitions:

Token Economy

A form of behavior modification that uses tokens or symbols as rewards for performing desired behaviors, which can be exchanged for other rewards.

Behavior Modified

A therapeutic approach aimed at changing negative behaviors through various techniques such as reinforcement or punishment.

Respondent Behavior

Behavior that occurs as an automatic response to some stimulus, often discussed in the context of classical conditioning.

Specific Stimulus

A particular environmental event or condition that elicits a response from an organism.