The practice of charging higher prices for products or services when they are first introduced is known as:
A) Transfer pricing
B) Price skimming
C) Peak load pricing
D) Price gouging

Question

Quizplus · Accepted Answer

Price skimming is a strategy where a business charges a high initial price for its product or service, then gradually lowers the price over time. This strategy is typically used for new or innovative products that have limited competition, allowing the business to maximize profits in the early stages of the product's life cycle. Transfer pricing refers to the practice of setting prices for goods or services exchanged between different divisions or subsidiaries within a company. Peak load pricing involves charging higher prices during periods of high demand, while price gouging refers to unethical or unfair pricing practices during times of crisis or scarcity.

The Practice of Charging Higher Prices for Products or Services