A company might use penetration pricing when
A) demand for a new product is price inelastic.
B) a seller wants to charge a relatively high price on a new product.
C) the firm expects competition to move in rapidly.
D) economies of scale are not a consideration.

Question

Quizplus · Accepted Answer

This policy is used when the firm expects competition to move in rapidly and when demand for the product is, at least in the short run, price elastic. This policy is also used to obtain large economies of scale and as a major instrument for rapid creation of a mass market.

A Company Might Use Penetration Pricing When