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Which two causes are given for the price reductions late in the growth stage?
AIncreased competition and cost cuts from larger volumes
BIncreased taxation and higher wages paid to the workers
CFalling demand and the entry of substitute technologies
DGovernment price controls and the loss of distributors
Answer & Solution
Correct answer: A. Increased competition and cost cuts from larger volumes
1. Prices normally begin falling toward the end of the growth phase.
2. One cause is increased competition as more rivals enter the market.
3. The other is cost reduction from producing larger quantities, known as economies of scale.
4. Falling demand belongs to the decline stage, not to growth where sales are still rising.
5. Higher taxes and wages would push prices up rather than down.
6. Losing distributors would weaken market position rather than cut price.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 11 "Creating Products and Pricing Strategies to Meet Customers' Needs", section 11.8 The Product Life Cycle_
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