Asked by Kevin Chaffins on Jun 01, 2024
Verified
Which firm in an industry is likely to have higher profits?
A) Sellers with higher costs than their competitors
B) Sellers with lower costs than their competitors
C) Sellers with the same costs as their competitors
D) All of the above
Higher Profits
The increased financial gain achieved by a business when its revenue exceeds its expenses by a greater margin than before.
Costs
Costs refer to the amount of money required for the production of goods or services, including expenses related to labor, materials, and overheads.
Competitors
Entities or individuals that are in the same industry or market and vie for the same customers or resources.
- Gain knowledge on the influence of market arrangement on corporate competition and profitability levels.
Verified Answer
JM
Jessica MichelJun 06, 2024
Final Answer :
B
Explanation :
In a competitive market, firms with lower costs can offer lower prices and attract more customers, resulting in higher profits. Higher costs mean that prices must be higher to make a profit, which may discourage some customers from buying from that seller. Selling at a lower price than competitors while still making a profit is easier for firms with lower costs. Therefore, sellers with lower costs than their competitors are likely to have higher profits.
Learning Objectives
- Gain knowledge on the influence of market arrangement on corporate competition and profitability levels.