Which of the Following Statements About Cost Leadership and the Threat

question 29

Multiple Choice

Which of the following statements about cost leadership and the threat of buyers is accurate?

• A) If buyers demand increased quality or service, cost leaders can absorb these costs and may still have a cost advantage over the competition.
• B) Being a cost leader encourages buyer backward vertical integration.
• C) Firms pursuing a cost-leadership strategy are especially vulnerable to powerful buyers who insist on low prices or higher quality and service from their suppliers.
• D) Cost leaders are not able to absorb costs associated with buyers' demands for increased quality or service.

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Definitions:

Products

Goods or services that are created through a process of production and offered in the market to satisfy consumer needs or wants.

Resource Markets

Markets where factors of production (like labor, land, and capital) are bought and sold.

Households Incomes

Refers to the total amount of money earned or received by all members of a household, encompassing wages, salaries, benefits, and other income sources.

Circular Flow Model

An economic model illustrating the continuous flow of goods, services, and money between households and businesses in an economy.