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Exam IIA-CIA-Part3 All Questions

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Exam IIA-CIA-Part3 topic 1 question 40 discussion

Actual exam question from IIA's IIA-CIA-Part3
Question #: 40
Topic #: 1
[All IIA-CIA-Part3 Questions]

Which of the following statements pertaining to a market skimming pricing strategy is not true?

  • A. The strategy is favored when unit costs fall with the increase in units produced.
  • B. The strategy is favored when buyers are relatively insensitive to price increases.
  • C. The strategy is favored when there is insufficient market capacity and competitors cannot increase market capacity.
  • D. The strategy is favored when high price is perceived as high quality.
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Suggested Answer: A 🗳️

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Prossyn
8 months, 3 weeks ago
It is because unit cost does not fall with an increase in units produced but rather to take advantage of the next type of customers remember under market skimming customers perceive a high cost product to be of a better quality
upvoted 1 times
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Langha
2 years ago
all other options favors price skimming , hence we are left with only option A . i don't know the logic behind option A
upvoted 1 times
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NicoleG
2 years, 11 months ago
A skimming strategy sets an initial high price and then slowly lowers the price to make the product available to a wider market. The question is asking which one of the options is NOT true, and since the rest of the options (B,C & D) “could” be true, in terms of relating it to the definition of the skimming strategy, then A is NOT TRUE.. which is what the question (at face value) is asking. Hope this helps!
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dedfef
2 years, 11 months ago
explain please
upvoted 1 times
AKKR
2 years, 11 months ago
first you take advantage of being innovative or with better marketing, so you put higher margin with lower production. When competitors appear on the market, you lower price, taking advantage of higher demand and your growing in time production
upvoted 1 times
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