A Company That Succeeds in Differentiating Its Product Offering from Those

question 4

Multiple Choice

A company that succeeds in differentiating its product offering from those of its rivals can usually

• A) avoid having to compete on the basis of simply a low price.
• B) charge a price premium for its product (because buyers see its differentiating features as worth something extra).
• C) increase unit sales (because of the attraction of its differentiating product attributes).
• D) gain buyer loyalty to its brand (because some customers will have a strong preference for the company's differentiating features).
• E) All of these choices are correct.

---

Definitions:

MC > MR

A condition where a firm's marginal cost is greater than its marginal revenue, suggesting that it would not be profitable to increase output further.

Monopolistic Competition

A market structure where many companies sell products that are similar but not identical, leading to competition based on price, quality, and marketing.

Marginal Decision Rule

A principle stating that actions should be taken if marginal benefits exceed marginal costs.

MC = MR

A condition where a firm's marginal cost equals its marginal revenue, often used to determine the optimal level of output and price in perfect competition.