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22 Apr 2017, 01:59
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A
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
95%
(hard)
Question Stats:
33% (02:49) correct
67%
(02:58)
wrong
based on 1058
sessions
History
Date
Time
Result
Not Attempted Yet
Companies that dominate an industry usually do so by developing a competitive advantage, often control of a unique resource or a superior technology, that allows them to manufacture products at a lower cost than their competitors can. Nondominant companies that seek to increase their share of the market generally must endure drastically lower profit margins as they win customers away from the dominant companies by matching their prices. Companies that increase their market share in this way and do not change their disadvantage in production costs relative to those of the dominant companies will, therefore, eventually lose their recently won market share as prices return to normal levels.
Which of the following is an assumption upon which the conclusion of the argument depends?
A. Few companies lacking competitive advantages in costs of production that have increased their market share will sustain price margins lower than those of firms with production cost advantages.
B. Dominant companies generally cannot maintain their competitive advantage over long periods of time unless they acquire additional unique resources or develop improved technology.
C. Nondominant companies can improve their competitive positions by developing unique resources or technological innovations similar to those of dominant companies.
D. A dominant company with a competitive advantage generally will not lower its prices to undercut those of a firm that lacks competitive advantages in production costs.
E. Acquiring unique resources or developing superior technology is a difficult undertaking that requires substantial investment on the part of a company seeking to gain a competitive advantage in production costs.
Which of the following is an assumption upon which the conclusion of the argument depends?
A. Few companies lacking competitive advantages in costs of production that have increased their market share will sustain price margins lower than those of firms with production cost advantages.
B. Dominant companies generally cannot maintain their competitive advantage over long periods of time unless they acquire additional unique resources or develop improved technology.
C. Nondominant companies can improve their competitive positions by developing unique resources or technological innovations similar to those of dominant companies.
D. A dominant company with a competitive advantage generally will not lower its prices to undercut those of a firm that lacks competitive advantages in production costs.
E. Acquiring unique resources or developing superior technology is a difficult undertaking that requires substantial investment on the part of a company seeking to gain a competitive advantage in production costs.
Ashy Boy
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24 Apr 2017, 03:42
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Why is it not E? whats the explanation for A?
24 Apr 2017, 04:08
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Ashy Boy
The conclusion is that companies without a competitive advantage will not
be able to retain an increase in market share
They will lose the market share
as they raise their prices back to original levels.
What if they decide not to increase the prices.... The author assumes that they
aren’t willing to continue with lower profit margins...
A dismisses this case -----Answer
Companies that can develop competitive advantages are irrelevant to
the conclusion....Hence E is wrong..
Hope its clear
