Penetration pricing will most benefit a firm when:

Question

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Penetration pricing is a strategy where a firm sets a low price initially to capture a significant share of the market quickly. Therefore, it will most benefit a firm when it needs to set a low price to capture market share. If customer price sensitivity is high (Option A), the firm may face strong competition that may force it to increase its price. Similarly, if production costs are likely to increase with increasing volume (Option B), the firm may not be able to sustain a low price in the long run. If the firm has a monopoly in a particular market (Option C), it can set any price it wants without losing its dominance, but it may face regulatory scrutiny, backlash from customers, or new entrants in the future.

Penetration Pricing Will Most Benefit a Firm When