A firm keeps a lower per unit price for its products so that a greater number of people buy them and its sales increase. Which of the following pricing objectives can this pricing serve?
(A) Obtaining market share leadership
(B) Maximising total profit in the long run
(C) Attaining product quality leadership
(D) Maximising profit in the short run
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A) and (B) only
(A) Obtaining market share leadership — Correct. A firm that wants a larger share of the market keeps its prices at lower levels. Then a greater number of people are drawn to buy its products.
(B) Maximising total profit in the long run — Correct. To maximise total profit in the long run, a firm opts for a lower per unit price. It captures a larger share of the market and earns more profit through increased sales.
(C) Attaining product quality leadership — Incorrect. For product quality leadership, higher prices are normally charged. They cover the high quality and the high cost of research and development.
(D) Maximising profit in the short run — Incorrect. To maximise profit in the short run, a firm tends to charge the maximum price for its products.
NCERT (2026-27 Edition): “5. Pricing Objectives: Pricing objectives are another important factor affecting the fixation of the price of a product or a service. Generally the objective is stated to be maximise the profits. But there is a difference in maximising profit in the short run and in the long run. If the firm decides to maximise profits in the short run, it would tend to charge maximum price for its products. But if it is to maximise its total profit in the long run, it would opt for a lower per unit price so that it can capture larger share of the market and earn greater profits through increased sales. Apart from profit maximisation, the pricing objectives of a firm may include: |