Deliberately Selling a Product Below Its Customary Price, Not to Increase

question 214

Multiple Choice

Deliberately selling a product below its customary price, not to increase sales, but to attract customers' attention in hopes that they will buy other products as well, is referred to as

• A)bundle pricing.
• B)magnet pricing.
• C)loss-leader pricing.
• D)predatory pricing.
• E)bait and switch.

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Definitions:

Monopolistic Competition

A market structure in which many firms sell a differentiated product, entry is relatively easy, each firm has some control over its product price, and there is considerable nonprice competition.

Market Structure

The characteristics of an industry that define the likely behavior and performance of its firms. The primary characteristics are the number of firms in the industry, whether they are selling a differentiated product, the ease of entry, and how much control firms have over output prices. The most commonly discussed market structures are pure competition, monopolistic competition, oligopoly, pure monopoly, and monopsony.

Product Development

The process of bringing a new product or service to the market, which includes ideation, design, development, testing, and launching.

Differentiation

The process by which companies distinguish their products or services from others in the market to create a perceived value and gain a competitive edge.