A Penetration Pricing Policy Is Most Likely to Be Effective

question 322

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)the high initial price will not attract competitors.
• C)a low initial price discourages competitors from entering the market.
• 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:

User-Pay Approach

A policy or system where users pay directly for the services or facilities they use, encouraging responsible usage and helping to cover the costs of service provision.

Sustainable Yields

The rate at which natural resources can be harvested without compromising their availability for future generations.

Non-Renewable Resources

Natural resources that cannot be replenished or that take millions of years to form, such as fossil fuels and minerals.

Exhausted

describes a state of extreme tiredness or fatigue, often resulting from physical or mental activity.