A price-skimming strategy assumes that
A) the initial demand is highly elastic.
B) the product is efficient.
C) it will be difficult to recoup development costs.
D) all consumers have homogeneous tastes.
E) the initial demand is highly inelastic.

Question

Quizplus · Accepted Answer

A price-skimming strategy assumes that the initial demand is highly inelastic, meaning consumers are willing to pay a high price for a new or innovative product despite the price. This allows companies to set high initial prices to "skim" maximum revenue layer by layer from segments willing to pay the high price.

A Price-Skimming Strategy Assumes That