A Skimming Pricing Policy Is Likely to Be Most Effective

question 206

Multiple Choice

A skimming pricing policy is likely to be most effective when

• A)consumers tend to be price sensitive.
• B)it will be easier to set measurable sales unit goals.
• C)a lower price will significantly lower fixed costs.
• D)consumers perceive your product to be similar to other products on the market.
• E)customers are willing to buy immediately at the high initial price

---

Definitions:

Long-Run Average Total Cost Curve

A curve that shows the lowest possible cost of producing different levels of output when all factors of production, including capital, can be varied.

Unit Costs

The investment required by a company to develop, keep, and trade one instance of a specific product or service.

Plant Size

Plant size refers to the capacity or physical extent of a manufacturing or production facility, which impacts its output and efficiency levels.

Minimum Efficient Scale

The smallest level of production at which a firm can achieve the lowest long-run average total cost, underscoring economies of scale.