Which of These Is the BEST Example of a Loss

question 114

Multiple Choice

Which of these is the BEST example of a loss leader?

• A) a gas station selling gasoline below market value to drive out competitors
• B) a gas station selling hot dogs well below market value to bring in customers
• C) a gas station advertising car washes to diversify its business
• D) a gas station hiring attendants to improve customer service

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Definitions:

Breakfast Special

A promotional deal or menu option offered by restaurants specifically for breakfast meals, often at a reduced price.

Costs

The expenses or value sacrificed in the production or procurement of goods and services.

AVC

Average Variable Cost, which is the total variable costs divided by quantity of output produced.

ATC

Average Total Cost; the sum of all production costs divided by the quantity of output produced.