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In which situation may a company need to change its pricing strategy due to a political decision?

Answer and explanation

Correct answer: Government increases tax on the product

The governing concept is the political environment and its effect on pricing decisions. A government can raise a tax on a product, and that decision may increase the company’s cost, the final selling price, or both. The company may then revise its pricing strategy, absorb part of the burden, reduce costs, or change the product mix. Therefore, option D is correct. The word “may” recognises that the response is not automatic; it depends on demand, competition, margins, and the size of the tax increase. Options A and C are internal or administrative matters with no necessary tax-policy effect, while pleasant weather is a separate environmental condition and not a political decision.

Related tags

Business-EnvironmentPolitical-EnvironmentTaxationPricing-StrategyPolitical EnvironmentBusiness EnvironmentBusiness StudiesClass 12 Mcq

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