If the Potential Responses of Competing Firms Are Likely to Be

question 73

Multiple Choice

If the potential responses of competing firms are likely to be very detrimental to the costs advantages of cost leaders, firms pursuing a cost-leadership competitive strategy should

• A) drop their prices below competitors' prices to increase overall economic performance through increased volumes of profitable sales.
• B) raise their prices above competitors, increasing overall economic performance through higher margins.
• C) focus on a specific niche market to avoid direct competition with aggressive competitors.
• D) set their prices equal to competitors' prices, sacrificing some market share for increased profit margins.

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Definitions:

Credit Side

The right side of an accounting ledger where credits are recorded, often indicating a decrease in assets or an increase in liability or equity.

Debit Side

The Debit Side of an account records increases in assets or expenses and decreases in liabilities, equity, and income in double-entry bookkeeping.

Rules Of Debit

Rules governing the increase or decrease in account balances within the double-entry bookkeeping system, where debits typically increase assets or expenses and decrease liabilities, equity, and revenue.

Credit Side

The right side of an accounting entry, indicating increases in liabilities, revenues, and equity, and decreases in assets and expenses.