As a barrier to new entry, absolute cost advantages can be based on:

A. continuous advertising of brand and company names, and product innovation achieved through research and development.

B. high product quality, service-oriented innovations, and good after-sales service.

C. the unique ability of established companies to spread fixed costs over a large volume.

D. cost reductions that arise from the mass production of standardized output.

E. superior production operations and processes due to accumulated experience, patents, or trade secrets.

Question

Business

Alina Gonzales

22 November, 02:06

As a barrier to new entry, absolute cost advantages can be based on:

A. continuous advertising of brand and company names, and product innovation achieved through research and development.

B. high product quality, service-oriented innovations, and good after-sales service.

C. the unique ability of established companies to spread fixed costs over a large volume.

D. cost reductions that arise from the mass production of standardized output.

E. superior production operations and processes due to accumulated experience, patents, or trade secrets.

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Answers (1)

Know the Answer?

Aubree · Answer 1

E. superior production operations and processes due to accumulated experience, patents, or trade secrets.

Explanation:

The absolute cost advantages Is an economic principle which states: than a firm has absolute cost advantages when using the same amount of resourses than a competitor is able to produce or sell more of a good or service.

From the given options:

E is the correct as: It represent the better use of the same raw material, machinery and labor hours to generate a better output than competitors.