Compared to a Differentiator,the Cost Leader Has the Advantage Over

question 22

Multiple Choice

Compared to a differentiator,the cost leader has the advantage over its rivals of

• A) making higher profit margins.
• B) being better able to withstand the negative influence of powerful suppliers and buyers.
• C) having inimitable production methods.
• D) enjoying higher brand loyalty.
• E) being preferred by investors.

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Definitions:

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the total quantity of output produced.

Average Variable Cost

The total variable costs divided by the quantity of output, representing the variable cost per unit of output.

Marginal Cost

The escalation in total financial outlay due to the creation of one more unit of a product or service.

Average Total Cost

Calculated by dividing the total cost to produce a product by the quantity of the product produced, it represents the per-unit cost of production.