Which of the following is true of price skimming?
A) It is effective in situations in which competitors are able to undercut prices easily.
B) It can be profitably used when the product's quality and image support its price.
C) It involves underpricing products so that companies make larger sales.
D) It is ineffective in situations in which competitors are unable to enter the market easily.
E) It leads to a situation in which the company makes more, though less profitable, sales.

Question

Quizplus · Accepted Answer

Price skimming involves setting a high initial price for a new product, typically targeting early adopters who are willing to pay a premium. It is effective when the product's quality and image support its price, as customers are willing to pay more for a superior product. Price skimming is not effective when competitors are able to easily undercut prices, as this will lead to decreased demand for the higher-priced product. Additionally, price skimming is a strategy that aims to maximize profits, rather than sales volume.

Which of the Following Is True of Price Skimming