Which of the following is an example of price skimming? A) Gourmet Pi

QUESTION

Which of the following is an example of price skimming?

A) Gourmet Pizza shop sells special-topping pizzas for $15.99.
B) Walmart sells all products at a low price every day.
C) When Macy’s introduces new clothing every season, it starts out selling the items at a high price. After a few weeks, the store holds special sales to sell the items at a lower price.
D) When Amazon first introduced the Kindle e-book reader, the product had no competition and was priced high.
E) When Hewlett-Packard introduced its DeskJet color printer, the product had little competition and was priced low.

ANSWER

Answer: D
Explanation: D) Price skimming means setting a high price to make a large profit; it can work when there is little competition.