Rhiannon Is a Customer of Inthenews Ltd

question 88

Multiple Choice

Rhiannon is a customer of Inthenews Ltd. She consistently orders low-margin services, but requires extensive technical support from Inthenews Ltd. In employing ABM techniques to manage customer profitability, Inthenews' staff should:

• A) Reduce staff costs in their technical support area
• B) Increase prices charged to other customers
• C) Consider new approaches to providing services to Rhiannon
• D) Increase the price charged for Rhiannon's orders

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Definitions:

Constant Returns

A situation in production where increasing the inputs by a certain proportion results in an increase in output by the same proportion.

Input Prices

The costs associated with the purchase of the materials, labor, and other inputs required for the production of goods or services.

Marginal Returns

The additional output gained by employing an additional unit of a resource.

Labor

The measure of the work done by human beings in the economy, often referred to in terms of hours worked or total workforce.