Businesses That Create Competitive Advantages from One or Both of Cost

question 15

Multiple Choice

Businesses that create competitive advantages from one or both of cost and differentiation usually experience ______ profitability within their industry.

• A) above-average
• B) average
• C) below average
• D) marginal

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Definitions:

Output

The quantity of products or services produced by a company, a sector, or an economy within a specified period.

Profit

The profit made when the income from a business operation surpasses the expenditures, costs, and taxes required to maintain that operation.

Zero Marginal Cost

Zero marginal cost describes a situation where producing one additional unit of a good or service does not increase the total cost of production.

Fixed Cost

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance, which are incurred regardless of the quantity produced.