In your opinion what can be the circumstances when a Low Cost-01113
This subjective question is related to the book/course
vu eco401 Economics.
It can also be found in
vu eco401 Mid Term Solved Past Paper No. 4.
Question 1: In your opinion, what can be the circumstances when a Low Cost Producer in an industry brings effectiveness?
--or--
Low-cost producer in an industry can be especially effective when the market is Composed of many price-sensitive buyers, when there are few ways to achieve product differentiation, when buyers do not care much about differences from brand to brand, or when there are a large number of buyers with significant bargaining power The basic idea is to under price competitors and thereby gains market share and sales, driving some competitors out of the market entirely. Page#86
Answer:
The circumstances will be for high cost producers because, when low cost producer come into market. Its costumers will be increased. Also LOW-COST PRODUCER would generally have a higher profit margin.--or--
Low-cost producer in an industry can be especially effective when the market is Composed of many price-sensitive buyers, when there are few ways to achieve product differentiation, when buyers do not care much about differences from brand to brand, or when there are a large number of buyers with significant bargaining power The basic idea is to under price competitors and thereby gains market share and sales, driving some competitors out of the market entirely. Page#86
