Perceived quality pricing suggests that customers judge quality by price; which statement best reflects this concept?

• A. Customers judge quality by price; a low price signals bad quality.
• B. A higher price always signals premium quality.
• C. Perceived quality pricing ignores customer perceptions of value.
• D. Price changes have no impact on perceived quality.

Answer: (A)

In perceived quality pricing, customers use price as a cue to infer quality. If the price is low, they may conclude the quality is poor, which is why a low price signaling bad quality is the most direct reflection of this idea. The other statements are less accurate: price does not always guarantee premium quality, it can mislead, and perceptions of value are involved in judging quality, so saying price changes don’t affect perceived quality ignores a key signaling effect.