Which of the Following Is an Advantage of Pursuing Cost

question 5

Multiple Choice

Which of the following is an advantage of pursuing cost leadership?

• A)Sales always increase with increasing amounts of output
• B)Loss of sales does not reduce scale benefits
• C)The strategy easily accommodates changes in the market
• D)Firms invest heavily in differentiating their products
• E)A firm may charge the same price as its competitors but make a higher profit

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Definitions:

Cash

Money in the form of coins or banknotes, especially that used to operate a business.

Cash Basis

An accounting method whereby revenues and expenses are recorded when cash is received or paid, rather than when they are incurred.

Accounting

The process of recording, classifying, summarizing, and interpreting financial transactions to provide information that is useful in making business decisions.

Financial Statements

Reports summarizing a company's financial performance and position, including income statement, balance sheet, and cash flow statement.