In Some Cases, Penetration Pricing May Follow Skimming Pricing

question 159

Multiple Choice

In some cases, penetration pricing may follow skimming pricing. The skimming pricing would help ________ and the penetration pricing would help

• A) Increase market share; attract price-insensitive customers.
• B) attract price-sensitive customers; increase market share.
• C) Recoup initial research and development costs; increase market share.
• D) recoup initial research and development costs;improve firm reputation.
• E) increase market share; attract price-insensitive customers.

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Definitions:

Expected Returns

The average of all possible returns for an investment, weighted by the likelihood of each outcome.

Standard Deviations

A statistical measure indicating the amount of variation or dispersion from the average or expected value, widely used in finance to assess investment risk.

Risk Premium

The extra return expected by investors for holding a risky asset over a risk-free asset, compensating them for the risk of loss.

Treasury Bill

Short-term government securities with maturity periods typically less than a year, considered to be risk-free investments.