In Recent Years, the "Fax Attack" Model of Car Shopping

question 31

Multiple Choice

In recent years, the "fax attack" model of car shopping has become popular. In a "fax attack," a customer sends a fax to every car dealership within a certain radius listing the make and features of the car they would like, along with the price they are willing to pay, and asks dealerships that will match that price to contact the customer. In essence, the customers set both the features and the price for the car. McCall Automotive has experienced a sharp increase in the number of fax attacks, and Phil, the sales manager, is seeking methods for addressing the situation. Phil is also concerned about the dealership's positioning strategies and market share.
-Phil believes that the dealership should lower car prices to capture a higher share of the market. Which statement best supports Phil's argument?

• A)Short-term profits will not be affected by lower prices if a firm is an e-retailer.
• B)Competitors will lower prices to gain market share,and a price war will ensue.
• C)Firms with large market shares are publicly owned but less strictly monitored.
• D)A temporary reduction in profits could lead to long-term future profits because of greater market share.
• E)A company with the largest share of the market can cut costs and raise prices without the public noticing or switching to competitors.

---

Definitions:

Refugee Act

Legislation passed in 1980 by the United States to establish a comprehensive federal policy for the resettlement and humanitarian assistance of refugees.

Tax Increase

The government's act of raising the amount required to be paid on earnings, purchases, or property to generate revenue for public projects and services.

Revenue Enhancements

Euphemistic term for measures aimed at increasing governmental income, typically through raising taxes or fees.

Federal Government

The national government of a federation, which holds authority over the entire territory, distinguishing it from state or local governments.