Final answer:
The statement in question is false as skim pricing is not suitable for markets with easy competitor entry, many competitors, and no significant product differentiation. Skim pricing involves setting high initial prices for unique products, which doesn't apply to a perfect competition scenario where competitive pricing is more appropriate.
Step-by-step explanation:
The statement 'When a business's product has no considerable and sustainable differential advantage in a quality-sensitive market, with many competitors, many substitutes and easy competitor entry, conditions are favorable for a skim pricing strategy' is false. Skim pricing is not suitable for markets characterized by easy competitor entry, many competitors, product homogeneity, and no significant differential advantage. In such markets, characterized by perfect competition, companies are typically price takers due to the high level of similarity among products and the lack of differentiation.
Conditions more favorable for a skim pricing strategy might include: a well-respected brand name, product differentiation, or when the market has barriers to entry. A skim pricing strategy generally involves setting a high price for a new product with some unique features or qualities that distinguish it from competitors. Over time, the price is lowered as the product's novelty wears off and competitor products enter the market.
In a market with perfect competition, the strategy would more likely be centered on competitive pricing, cost leadership, or finding ways to differentiate the product despite the large number of substitutes and the presence of many sellers with similar products. An example of a competitive industry where economies of scale are small and there's a known history of price slashing in response to competitor entry further demonstrates the unsuitability of a skim pricing strategy in such market conditions.