When a Competitor Cuts Its Price, a Company Should ________

question 122

Multiple Choice

When a competitor cuts its price, a company should ________ if it believes it will not lose much market share or would lose too much profit by cutting its own prices.

• A) reduce its production costs
• B) reduce its marketing costs
• C) maintain its current prices and profit margin
• D) increase its marketing budget to raise the perceived value of the product
• E) increase its production costs to improve the quality of the product

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Definitions:

Outstanding Shares

Refers to the total number of shares of a corporation's stock that are owned by shareholders at any given time.

Acquisition Costs

Expenses directly associated with acquiring a new customer or asset, including marketing, sales expenses, and the cost of the goods or services themselves.

Contingent Consideration

An obligation of a buyer to transfer additional assets or equity interests to a seller if future events occur or conditions are met after a business combination.

Fair Value

The expected monetary return from disposing of an asset or the expense of relocating a liability in a controlled market interaction at the time of evaluation.