When the Swiss watchmaker TAG Heuer quadruped the average price of its watches, its sales volume jumped sevenfold. The likely cause of this volume increase is that
A) the watch market is highly conservative.
B) economies of scale in production would be substantial.
C) retailers are not willing to carry new brands of watches in this category.
D) once the initial price is set, it is nearly impossible to lower the price without alienating early buyers.
E) the watch category frequently uses prestige pricing, wherein lower prices may result in lower sales.

Question

Quizplus · Accepted Answer

Prestige pricing suggests that higher prices can increase demand by enhancing the perceived value and exclusivity of the product, which likely explains the increase in sales volume for TAG Heuer.

When the Swiss Watchmaker TAG Heuer Quadruped the Average Price