CBSE Class 12 Business Studies 2023 Outside Delhi set 1

Question : 17

Total: 45

In which, of the following situations, a company will fix high price for its product ?

When firm's objective is to obtain larger share of the market.
When the firm is facing difficulties in surviving in the market because of intense competition.
When the firm wants to cover high cost of Research and Development to attain product quality leadership.
When the firm wants to maximise its total profit in the long run.

Solution:

(c) When the firm wants to cover high cost of Research and Development to attain product quality leadership.
When a company invests heavily in research and development to attain product quality leadership, it incurs higher costs. In order to recover this cost and earn a profit, the company may fix a high price for its product.

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