Texas Instruments builds a large plant to produce a great quantity of products,hoping that as prices decline,sales volume increases and thus costs decline.This market-penetration pricing is dependent upon three conditions existing in the marketplace.Which one of the following is NOT one of these conditions
A) Low price discourages competition from entering the market.
B) Production and distribution costs actually fall with increases in production.
C) Low prices does not increase consumer demand but increases retailer competition.
D) The market is stimulated by lower prices.
E) The market is highly price sensitive.

Question

Quizplus · Accepted Answer

The three conditions required for market-penetration pricing to be effective are:

1) The market is stimulated by lower prices.
2) The market is highly price sensitive.
3) Production and distribution costs actually fall with increases in production.

Option C contradicts the first condition by stating that low prices do not increase consumer demand but increase retailer competition. Therefore, option C is the incorrect answer.

Texas Instruments Builds a Large Plant to Produce a Great