UGC NET COMMERCE June 2019 Q7
- Option : C
- Explanation : Skimming price is one of the strategies used by a firm when it introduces a new product in the market. In this strategy, the firm charges a very high price for the product and, later, gradually reduces the price. The reason for using this strategy is that the firm has incurred a substantial cost on development of the new product, and, before the competitors enter the market, the firm wants to take back the development cost. Once competition picks up in the market, the firm gradually reduces price. Though the sale volume would be low when skimming price is charged, the profit margin being high, the firm would be able to recoup its development cost.
