The correct answer is: If demand is highly elastic.
If demand is highly elastic it responds well to low prices.
If a product is new and different, market skimming would be more appropriate. Customers would be prepared to pay high prices so as to be one up on other people who do not own the product.
Market penetration pricing is appropriate if there are significant economies of scale to be achieved from a high volume of output, so that quick penetration into the market is desirable in order to gain unit cost reductions.
