Abco Realty Owns Several Rental Apartment Buildings in a Working

question 23

Multiple Choice

Abco Realty owns several rental apartment buildings in a working class but safe neighborhood that has recently become popular with young professionals because of its proximity to an express commuter train line. Abco has recently invested in the infrastructure of the buildings,adding laundry rooms,safety features to the lobbies,and new insulated windows to all the units. Because of this,Abco cannot afford to match the unit rental prices of other buildings that have not made improvements. How should the sales manager of Abco Realty most likely differentiate Abco's units from units offered in other buildings?

• A)The sales manager can convince management to cut expenses on basic maintenance so the apartments can be rented at prices matching other buildings in the area.
• B)The sales manager can promote the neighborhood as a safe place to live with a rich history.
• C)The sales manager can convince the owners of the other buildings in the area to bring their rental prices up to the prices Abco charges.
• D)The sales manager can promote Abco apartments as being worth more money because they are safer and have more services.
• E)The sales manager can promote Abco apartments as being worth more money because the company has helped raise home values in the area.

Describe the demand curve faced by perfectly competitive firms and its implications.

Recognize the impacts of market entry and exit on the supply, demand, and pricing in the long run.

Discuss the notion of economic versus accounting profits in the context of perfect competition.

Identify the efficiency criteria for firms in perfect competition in terms of productive and allocative efficiency.

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Definitions:

Net Profit Margin

A financial ratio indicating the percentage of revenue that remains as net profit after all expenses are deducted from total revenues.

Leverage

The use of various techniques or borrowed capital (debt) to increase the potential return of an investment.

Outsourcing

Transferring a firm’s activities that have traditionally been internal to external suppliers.

External Suppliers

Third-party companies or entities that provide products or services to another company as part of the supply chain, outside of the purchasing company's organization.