Question

An online retailer of consumer electronics changes its price very frequently, often up to 100 times in a day for the same good. Which of the following statements is incorrect regarding this pricing strategy? Price information collected by consumers quickly becomes obsolete. The strategy makes it more difficult for competitors to undercut the selling price. It is usually easier for online retailers to use this pricing strategy than retailers with physical locations. Consumers become less likely to do price comparisons when firms use this strategy. Firms that use this strategy often have lower profits because of the tendency for price wars to result.

Answer 1

E) Firm's that use this strategy often have Lower profits because of the tendency for price wars to result.

This is incorrect because those firm's who uses this strategy will generate higher profit.