When Circuit Town Electronics sets its televisions at three price levels of $699, $899, and $1,099, it is most likely using ________.
A) price fixing
B) price lining
C) penetration pricing
D) skimming pricing
E) loss leader pricing

Question

Quizplus · Accepted Answer

Circuit Town Electronics is most likely using price lining, which involves setting a limited number of prices for similar products. This allows customers to easily compare products based on price and features, and can simplify the buying process. Price fixing involves colluding with competitors to set prices, which is illegal. Penetration pricing involves setting a low initial price to enter a new market, while skimming pricing involves setting a high initial price for a new, innovative product. Loss leader pricing involves selling a product at a loss to attract customers and encourage them to buy other products. None of these strategies are consistent with Circuit Town Electronics setting three distinct price levels for their televisions.

When Circuit Town Electronics Sets Its Televisions at Three Price