If Customers Perceive the Benefits of an Alternative to Be

question 16

Multiple Choice

If customers perceive the benefits of an alternative to be similar to that of a product,then the ________.

• A) switching cost is high
• B) price of the product should be increased to retain market share
• C) threat from the substitute is strong
• D) customers' bargaining power decreases

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Definitions:

Machine-Hours

A measure of the amount of time machines are used in the production process, often used as a basis for allocating manufacturing overhead costs.

Manufacturing Overhead

Indirect factory-related costs that are incurred when a product is manufactured.

Predetermined Overhead Rate

A rate calculated before the accounting period begins, used to assign overhead costs to products based on a selected activity base.

Indirect Labor Cost

Refers to wages paid to employees who are not directly involved in the production of goods or services, such as maintenance staff and supervisors.