Economics, Week 7 Quiz

What is a competitive advantage?

• A disadvantage that places a firm in a worse position than its competitors.

• Anything that places a firm in a better position than its competitors.

• A strategy to increase employee satisfaction.

• A method to reduce production costs.

Which of the following is a source of competitive advantage?

• Cost leadership

• Employee turnover

• Market saturation

• Product obsolescence

What does cost leadership involve?

• Providing a product at a higher price than its competition

• Providing a product at a lower price than its competition

• Increasing the cost of production

• Reducing employee income

What is product differentiation?

• A) When a firm supplies products that are the same as its competitors.

• B) When a firm supplies products that are different/better than what its competitors can offer.

• C) When a firm reduces the quality of its products.

• D) When a firm increases the price of its products.

A diagram showing the four types of competitive advantage: Cost Leadership, Differentiation, Cost Focus, and Differentiation Focus.

What role does successful marketing play in a firm's competitive advantage?

• It decreases the firm's competitive advantage.

• It has no effect on the firm's competitive advantage.

• It boosts the firm's competitive advantage.

• It makes the firm's products more expensive.

What can marketing convince people to do if done well?

• To avoid buying the product.

• To buy the product even if better options are available.

• To buy only the best available product.

• To ignore the product.

What is innovation?

• The process of maintaining old products and methods.

• New ideas or new products, better ways to produce, new ways of organizing staff, and anything else that improves production into the future.

• The act of reducing production costs.

• The strategy of copying competitors' products.

Why do firms need to foster innovation?

• To reduce their workforce.

• To maintain their current market position.

• To continue to be competitive.

• To increase their prices.

What can happen over time with new ideas from firms?

• They can be ignored by others.

• They can be adopted by others, and consumers catch on.

• They can lead to a decrease in production.

• They can cause firms to lose market share.