Two Homebuilders Are Building Homes in Nearby Subdivisions

question 71

Multiple Choice

Two homebuilders are building homes in nearby subdivisions. One is offering 2,500-square-foot homes with two- acre yards. The other is offering a similar size of house with quarter-acre yards. The builder offering the smaller lots cannot keep up with demand. The builder offering the larger lots has several unsold houses. The builder with the smaller lots most likely used_____________ to determine what homebuyers desired.

• A) reactive customer monitoring
• B) proactive customer monitoring
• C) competitive analysis
• D) environmental munificence
• E) consumer confidence forecasts

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Definitions:

Marginal Productivity Theory

An economic theory suggesting that the addition of a unit of labor or capital within the production process will increase the output by the amount of the marginal product.

MP L

Marginal Product of Labor; the additional output resulting from employing one more unit of labor, holding other inputs constant.

MP C

Marginal Propensity to Consume, which is the fraction of additional income that a household spends on consumption.

Production Costs

Expenses associated with the creation of a product or service, including raw materials, labor, and overhead costs.