When the Swiss Watchmaker TAG Heuer Raised the Average Price

question 259

Multiple Choice

When the Swiss watchmaker TAG Heuer raised the average price of its watches from $250 to $1,000,its sales volume jumped sevenfold.The likely cause of this volume increase is

• A) because the watch market is highly conservative.
• B) because economies of scale in production would be substantial.
• C) because retailers are not willing to carry new brands of watches in this category.
• D) because once the initial price is set, it is nearly impossible to lower the price without alienating early buyers.
• E) because the watch category frequently uses prestige pricing, wherein lower prices may result in lower sales.

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