After estimating the demand and costs associated with alternative prices, a company has chosen to price its product in such a way that it gains the highest rate of return on its investment. The company is looking to ________.
A. maximize market share
B. skim the market
C. become a product-quality leader
D. survive in the market
E. maximize current profit
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Companies who believe that higher sales volume leads to lower unit costs and higher long-run profits are attempting to ________.
A. maximize their market share
B. skim the market
C. become a product-quality leader
D. merely survive in the market
E. maximize their current profits
A market-penetration pricing strategy is most suitable when ________.
A. a low price slows down market growth
B. production and distribution costs fall with accumulated production experience
C. a high price dissuades potential competitors from entering the market
D. the market is characterized by inelastic demand
E. a low price encourages actual competition
When Apple introduced its iPhone, it was priced at $599. This allowed Apple to earn the maximum amount of revenue from the various segments of the market. Two months after the introduction, the price had come down to $399. What kind of a pricing did Apple adopt?
A. loss-leader pricing
B. market-penetration pricing
C. market-skimming pricing
D. target-return pricing
E. value pricing
Market skimming pricing makes sense under all the following conditions, EXCEPT if ________.
A. a sufficient number of buyers have a high current demand
B. the unit costs of producing a small volume are high enough to cancel the advantage of charging what the traffic will bear
C. the high initial price does not attract more competitors to the market
D. consumers are likely to delay buying the product until its price drops
E. the high price communicates the image of a superior product
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