A Major Drawback of Price Competition Is That

question 187

Multiple Choice

A major drawback of price competition is that

• A) it lowers prices.
• B) it gains customers.
• C) customers equate lower prices with lower quality.
• D) competitors can also lower their prices.
• E) it generates brand loyalty.

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Definitions:

Variable Component

Part of a cost or expense that varies directly with the level of activity, production, or sales.

Inspection Cost

Expenses associated with the activity of checking and verifying the quality or standards of products or materials.

Mixed Cost

Mixed cost is an expense that has both fixed and variable components, meaning it changes with the level of activity but also incurs a base cost.

Least-squares Regression

A statistical method used to determine the line of best fit by minimizing the sum of squares of the errors between the observed and predicted values.