Which of the Following Is a Risk (Or Potential Pitfall)of

question 14

Multiple Choice

Which of the following is a risk (or potential pitfall) of cost leadership?

• A) Cost cutting in one area of the value chain might increase costs in another.
• B) Attempts to stay ahead of the competition may lead to gold plating.
• C) Cost differences increase as the market matures.
• D) Producers are more able to withstand increases in supplier costs.

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Definitions:

Tying Contract

A sales agreement that requires the buyer to purchase another product or service, distinct from the product or service of interest.

Federal Trade Commission Act

A United States law established in 1914 to promote consumer protection and eliminate and prevent anticompetitive business practices.

Clayton Act

A U.S. antitrust law, enacted in 1914, aimed at preventing unfair business practices such as price discrimination, exclusive dealings, and mergers that significantly lessen competition.

Tying Contract

A type of agreement where the buyer is required to purchase a secondary product along with the primary product, often enforced by the seller.