Dropping an unprofitable customer will ________.
A) eliminate long-run costs assigned to that customer
B) eliminate most short-run costs assigned to that customer
C) decrease long-run profitability
D) increase the potential to cross-sell other products that are more desirable

Question

Quizplus · Accepted Answer

Dropping an unprofitable customer will eliminate most short-run costs assigned to that customer, such as production costs and service costs, but it may not eliminate long-run costs assigned to that customer, such as advertising and marketing costs. However, it may decrease long-run profitability if the company relies heavily on that customer for revenue. It may also increase the potential to cross-sell other products that are more desirable to profitable customers.

Dropping an Unprofitable Customer Will ________