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A firm has a cost competitive advantage when it can do what?
ASell at the lowest price in the market even at a loss
BBuy out its rivals and control the supply of the good
CProduce at lower cost than rivals and still earn margins
DCut its advertising budget below that of all its rivals
Answer & Solution
Correct answer: C. Produce at lower cost than rivals and still earn margins
1. A cost competitive advantage means producing at a lower cost than all competitors.
2. The firm must do so while still maintaining satisfactory profit margins.
3. Selling at a loss fails the second half of that test, so it is not a cost advantage.
4. Buying rivals is a takeover, and cutting advertising is a spending choice rather than a cost position.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 11 "Creating Products and Pricing Strategies to Meet Customers' Needs", section 11.2 Creating a Marketing Strategy_
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