The Typical Risks of a Cost Leadership Strategy Include

question 32

Multiple Choice

The typical risks of a cost leadership strategy include:

• A) the inability to balance high differentiation and low price.
• B) production and distribution processes becoming obsolete.
• C) excessive differentiation to the point where the customer base is too small.
• D) loss of customer loyalty.

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Definitions:

Cournot Equilibrium

A situation in oligopoly markets where each firm chooses the quantity to produce to maximize its profit, assuming the quantities of its rivals are fixed.

Price Elasticity

A measure of how much the demand or supply of a product changes in response to a price change.

Cournot Equilibrium

A model of market competition in which firms choose their output levels simultaneously and independently to maximize profit with the assumption of no further entry by other firms.

Marginal Cost

Marginal cost denotes the change in the total expense incurred by a firm when its output is increased by a single unit.