Question

A firm can develop competitive advantage by

a. raising willingness to pay a great deal with only slight increases in costs.

b. developing large cost savings with only slight decreases in customer willingness to pay.

c. producing superior products at lower costs.

d. None of the answers is correct

e. All of the answers are correct

Answer 1

• Answer to the given problem is "e. All of the answers are correct"

Reason:

• A firm can develop competitive advantage by any of the method which increase revenue and reduce cost of firm in comparison with its competitors.
• In the first option customers willingness to pay increases but cost is increased only slightly, which will provide competitive advantage to the firm
• In second option revenues will decrease slightly but cost reduction by saving in cost is large
• In the third option, producing superior products at lower cost will help to expand market share and will result into competitive advantage
• Hence, all the answers given are correct