How Is a Skimming Policy Different from a Penetration Policy

question 54

Multiple Choice

How is a skimming policy different from a penetration policy?

• A)A skimming policy is used when demand for a product is price inelastic,while a penetration policy is used when demand for a product is price elastic.
• B)A skimming policy is used when a seller wants to charge a relatively low price on a new product,while a penetration policy is used when a seller wants to charge a relatively high price on a new product.
• C)A skimming policy is used to obtain large economies of scale and for the rapid creation of a mass market,while a penetration policy is used to capitalize on a temporary monopoly.
• D)A skimming policy is used to discourage competition,while a penetration policy is used to obtain maximum revenue from the market before substitute products are created.

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Definitions:

S&P 500 Futures

Financial contracts that speculate on the future value of the S&P 500 index, allowing investors to predict and hedge against market movements.

Position

An investment holding or the amount of a particular security, commodity, or currency that an investor owns or has contracted to buy or sell.

Stock Index Futures

Are futures contracts where the underlying is a stock index, and they are used by investors to speculate on the future direction of the index's price or to hedge against potential index movements.

Multiplier

An economic factor that quantifies the effect of a change in one economic variable on another, for instance, how government spending affects national income.