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A Mobile Manufacturer Decides to Reduce the Price of Its

question 73

Essay

A mobile manufacturer decides to reduce the price of its latest line of smartphones, which are not the cheapest but have features that are popular among most users. Which strategy is the manufacturer using?


Definitions:

Diseconomies of Scale

The phenomenon where, as a firm expands, its costs start increasing per unit of output, usually due to inefficiencies and management challenges that arise with size.

Diminishing Returns

A principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase and may decrease.

Natural Monopoly

A market structure where a single provider is more efficient in supplying the entire market with a product or service, due to high fixed or startup costs.

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