Which of the following is true of product considerations in pricing?
A)A penetration policy is generally used when a firm expects minimal competition for a product.
B)A skimming policy is generally used when a firm expects competition to move in rapidly.
C)A penetration policy cannot be used to obtain large economies of scale.
D)A skimming policy is useful when demand for a product is price inelastic.

Question

Quizplus · Accepted Answer

A skimming policy works well when the demand for the product is price inelastic, meaning that consumers are willing to pay a high price for the product regardless of its price. This allows the firm to charge a high price and obtain high profits before competitors enter the market. A penetration policy, on the other hand, is often used when there is significant competition for a product, as the goal is to gain market share by offering a low price. Additionally, there is no inherent relationship between a penetration policy and achieving economies of scale.

Which of the Following Is True of Product Considerations in Pricing