When a Firm Possesses Capabilities That Allow It to Serve

question 16

Multiple Choice

When a firm possesses capabilities that allow it to serve customers' needs better than the competition, the firm is said to have a:

• A) resource advantage.
• B) competitive advantage.
• C) value-based advantage.
• D) marketing advantage.
• E) relative advantage.

---

Definitions:

Operating Income

Earnings before interest and taxes (EBIT), an indicator of a company’s profitability from its core business operations.

Fixed Overhead

Costs that do not change with the level of output, including rent, salaries, and insurance premiums.

Administrative Costs

Expenses that are not directly tied to production or sales, such as office expenses, salaries of administrative personnel, and legal fees.

Incremental Income

The additional income that is generated as a result of a specific business decision or activity.