Which of the Following Is NOT One of the Pitfalls

question 54

Multiple Choice

Which of the following is NOT one of the pitfalls of a low-cost provider strategy?

• A) Overly aggressive price-cutting
• B) Setting the industry's price ceiling to capture volume gains and achieve economies of scale
• C) Relying on an approach to reduce costs that can be easily copied
• D) Becoming too fixated on cost reduction
• E) Having the basis for the firm's cost advantage undermined by cost-saving technological breakthroughs that can be readily adopted by rival firms

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Definitions:

Loss-Minimizing

A strategy or approach targeted at reducing the negative impact of losses in business or investment.

Perfect Competitor

A theoretical firm in a perfectly competitive market that cannot influence the market price of its product and can only decide the amount of output produced.

Perfectly Elastic

A situation in demand or supply where quantity changes infinitely in response to any change in price.

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs.