A Penetration Pricing Policy Is Most Likely to Be Effective

question 58

Multiple Choice

A penetration pricing policy is most likely to be effective when

• A)lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost.
• B)many segments of the market are price sensitive.
• C)the high initial price will not attract competitors.
• D)customers interpret the high price as signifying high quality.
• E)enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable

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Definitions:

Plant Size

Refers to the scale or capacity of a manufacturing facility or industrial plant, affecting its potential output levels and efficiency.

Output Units

The measured quantity of goods or services produced by a firm or industry.

Long Run

A period of time in economics during which all factors of production and costs are variable, allowing for full industry adjustment to changes.

Extensive Range

A wide scope or variety of something, covering a broad spectrum.