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  9. Q174

ibps-so 2024 · Question 174 of 209

A small firm produces a commodity product with a Unit Cost of ₹80. The market leader sells the same product for ₹100. If the small firm adopts a 'Going-Rate' strategy, but the market leader suddenly drops the price to ₹75 to flush out competition, what is the immediate impact on the small firm?

  1. AThe small firm will likely drop its price to ₹75, even though it results in a loss of ₹5 per unitCorrect
  2. BThe small firm will increase its price to ₹120 to cover costs
  3. CThe small firm will maintain ₹100 to signal high quality
  4. DThe small firm will experience an increase in profit margin
  5. EThe small firm will switch to Skimming Pricing

Answer: A. The small firm will likely drop its price to ₹75, even though it results in a loss of ₹5 per unit

Official answer key verified. Detailed explanation coming soon.

Source: IBPS SO Marketing Officer Mains Memory Based 2024 - Adda247 · memory-based

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