A Differentiation Strategy Is Based on Creating a Product That

question 61

Multiple Choice

A differentiation strategy is based on creating a product that customers perceive as being

• A) about the same as other available products.
• B) distinct.
• C) the least costly product in the industry.
• D) the most costly product in the industry.
• E) somewhat faddish in nature.

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Definitions:

Average Variable Cost

The total variable costs of production divided by the quantity of output produced; it varies with the level of output.

Average-Variable-Cost Curve

A graphical representation showing how average variable costs of production vary with the level of output, typically U-shaped due to economies and diseconomies of scale.

Average Total Cost

The total cost of production (fixed and variable costs combined) divided by the number of units produced, indicating the average cost of producing each unit.

Marginal-Cost Curve

A curve that shows the cost of producing one additional unit of a good or service.