Question

When products cannot be easily differentiated: A. there is little room for price variations from the competition. B. a skimming price strategy is appropriate. C. a higher price can be charged. D. the lowest possible price must be charged.

Answer 1

Answer: A. there is little room for price variations from the competition.

Explanation: When products cannot be easily differentiated there is little room for price variations from the competition. This is often the case with businesses selling similar, homogeneous products wherein the attributes of the product remain similar.

However, despite selling product with similar attributes, at an similar price, the business may still attempt to differentiate itself through marketing; or improving on quality of products to be able to charge a premium; and lastly to lower prices so as to break even and even profit from increased sales.

Answer 2

A. there is little room for price variations from the competition

Step-by-step explanation:

When a company's product cannot be easily differentiated from competitors' products, it means that these companies sell homogenous products; the features and purpose are very similar to the customers and they would see little opportunity cost when they chose one over the other. The sellers are therefore price takers in the market and their sales revenues will depend on forces of demand and supply. Therefore, there is little room for price variations from their competitors.