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In order for a company to use single-segment pricing, it is necessary that ________.

A) the company set the lowest product price among similar products

B) there be no other competitor in the market

C) the total cost of ownership of the company's product be less than that of competing products

D) the company set a higher price than competitors for its product

E) the company first use a price skimming strategy when entering the market

User Loudej
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Final answer:

Single-segment pricing implies offering a single price to all customers, which does not require being the lowest priced, monopolistic, cost-leadership, or using price skimming strategies; it's a strategy common in perfectly competitive markets where firms face a perfectly elastic demand curve. Option A

Step-by-step explanation:

In order for a company to use single-segment pricing, it is not necessary that the company set the lowest product price among similar products, have no other competitors in the market, have a total cost of ownership less than that of competing products, set a higher price than competitors for its product, or first use a price skimming strategy when entering the market.

The concept of single-segment pricing simply refers to the strategy of offering a product or service at a single price to all customers, regardless of the cost to serve different customers or any differences in customers' willingness to pay.

In a context of perfect competition, which arises when there are many small firms selling identical products, no single firm can set a price higher than the market price because customers would switch to the next available supplier offering a lower price.

Therefore, every firm accepts the market price, and this price is determined by the overall market demand and supply. In this case, the firm faces a perfectly elastic demand curve for its product. Perfect competition implies that each firm can sell as much as it wants at the market price without influencing the price. Option A

User Archil Kublashvili
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