Wal-Mart Created a Competitive Advantage with Its Inventory System to Reduce

question 101

Multiple Choice

Wal-Mart created a competitive advantage with its inventory system to reduce the ratio of cost of goods sold to sales expecting:

• A)to enjoy huge economic profits forever.
• B)its rivals will never imitate their strategy and it will continue to enjoy positive economic profits.
• C)its rivals will immediately do the same thing and it will end earning zero profits.
• D)to enjoy economic profits for a few years before its rivals caught up.
• E)it will at least be able to cover its fixed costs.

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Definitions:

Workers

Individuals engaged in any form of economic activity to earn wages or salary.

Market Wage

The prevailing rate of pay for work in a particular field or occupation in the competitive market.

Profit Maximizing

The process of increasing the difference between total revenue and total cost to achieve the highest possible profit.

Marginal Revenue Product

The additional revenue generated by employing one more unit of a factor of production, keeping all other factors constant.