In which of the following pricing policies, a firm charges higher initial price for the product and reduces it over time as the demand at higher price is satisfied?

In Skimming pricing policies, a firm charges a higher initial price for the product and reduces it over time as the demand at a higher price is satisfied.

Explanation:

1. Price skimming is a product pricing strategy by which a firm charges the highest initial price that customers will pay and then lowers it over time.
2. As the demand of the first customers is satisfied and competition enters the market, the firm lowers the price to attract another, a more price-sensitive segment of the population.
3. This approach contrasts with the penetration pricing model, which focuses on releasing a lower-priced product to grab as much market share as possible.

1. Peak load pricing: Peak Load Pricing = Charging a high price during demand peaks, and a lower price during off-peak time periods.
2. Incremental pricing: It is an approach in which the price of all additional units produced after the fixed costs of production have been met are based on variable cost rather than on total cost.
3. Penetration pricing: Penetration pricing is a pricing strategy where the price of a product is initially set low to rapidly reach a wide fraction of the market and initiate word of mouth. The strategy works on the expectation that customers will switch to the new brand because of the lower price.