Being the Overall Low-Cost Provider in an Industry Has the Attractive

question 1

Multiple Choice

Being the overall low-cost provider in an industry has the attractive advantage of:

• A) building strong customer loyalty and locking customers into its product (because customers have such high switching costs).
• B) giving the firm a very appealing brand image.
• C) putting a firm in the best position to win the business of price-sensitive customers,set the floor on market price,and still earn a profit.
• D) putting the company in a strong position to be more profitable than companies pursuing a differentiation strategy.
• E) greatly reducing the strong bargaining power of key suppliers.

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Definitions:

Unit Cost

The amount a company spends to create, store, and market one instance of a certain product or service.

Least-Cost Combination

The least-cost combination is an economic principle that refers to the mix of factors of production that minimizes costs for a given level of output.

Resources

Inputs used in the production of goods and services, such as labor, capital, land, and entrepreneurship.

Output

The total amount of goods or services produced by a company, industry, or economy over a specific period of time.