Which of the Following Is True of Competitive Parity

question 10

Multiple Choice

Which of the following is true of competitive parity?

• A) It assumes the same percentage used in the past, or by competitors, is still appropriate for the firm.
• B) It does not take into account new plans (e.g., to introduce a new line of products in the current year).
• C) It does not allow firms to exploit the unique opportunities or problems they confront in a market.
• D) It assumes communication expenses do not stimulate sales and profit.
• E) If all competitors use this method to set communication budgets, their market shares will stay increase over time.

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Definitions:

Adjustment Costs

Expenses incurred in the process of modifying a business operation or strategy, including restructuring or equipment changes.

Transaction Motive

The need to hold cash for the purpose of conducting day-to-day business operations.

Float Management

The practice of managing the time difference between the writing of a check and its clearing at the bank, aiming to optimize the use of available funds.

Small Firm

A business with a limited number of employees and revenue, often defined within specific legal frameworks based on the industry.