A Skimming Pricing Policy Is Likely to Be Most Effective

question 219

Multiple Choice

A skimming pricing policy is likely to be most effective when

• A)consumers perceive your product to be similar to other products on the market.
• B)a lower price will have a major effect on reducing unit costs.
• C)competitors will be attracted to the market due to the potential for high sales revenues.
• D)consumers tend to be price sensitive.
• E)a high initial price will not attract competitors.

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Definitions:

Journal Entries

Records in accounting that document financial transactions in the books of account, showing the debit and credit of each transaction.

Dividends

Payments made by a corporation to its shareholders from its profits or reserves.

Balance Sheet Errors

Mistakes that occur in the preparation of the balance sheet, including misclassifications, incorrect amounts, or omitted transactions.

Retained Earnings

The portion of a company's profits that is kept or retained rather than distributed to shareholders as dividends, typically used for reinvestment.