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Question
Assertion (A): Parity Pricing is the most logical strategy when it is very difficult to calculate the cost of the products.
Reason (R): When price leadership is well established, setting price according to the competitors is the safest policy.
Options
(A) is true and (R) is false.
Both (A) and (R) are true and (R) is the correct explanation of (A).
Both (A) and (R) are true but (R) is not the correct explanation of (A).
Both (A) and (R) are false.
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Solution
Both (A) and (R) are true but (R) is not the correct explanation of (A).
Explanation:
Parity pricing means aligning prices with competitors. Parity pricing is effective when determining product costs is difficult. Aligning with benchmark prices set by significant competitors is a safe method to remain competitive, proving that both assertion and reasoning are true. Reason does not explain why parity makes sense when calculating product costs is difficult.
