Question

ABC Electronics introduced the first large flat screen TV. Shoppers were amazed by the sharp, colorful images, and consumers flocked to the stores to purchase one. ABC priced the product high while there were few competitors in order to recover research and development costs and maximize profits. This strategy is called

Answer 1

The strategy in which there is high price charged and there are a very few competitors available this suggests that there is a monopolistic competition. The strategy is premium strategy.

What is Monopoly?

Monopoly is the seller in a market where there is no competition, the sole seller of the products or services is the organization and thus this way the organization can charge the amount it wants.

In a monopolistic competition there are a few competitors available in the market and therefore they can charge high prices, as in the scenario ABC electronics have incurred a high amount of research and development cost and so that is why they are charging a high price.

The high price will be paid by the consumers because it is a cutting edge technology and thus ABC will generate greater profits.

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