The risk of being the lower-cost producer of a good or service is:
A)your business will fail more quickly.
B)your business will generate excess cash and will incur higher taxes.
C)your business will have problems keeping up with demand.
D)customers will abandon your business when someone else offers a lower price.

Question

Quizplus · Accepted Answer

The risk of being the lower-cost producer is that customers will abandon your business when someone else offers a lower price. This is because customers are primarily motivated by price and will switch to a competitor if they can get the same product or service at a lower cost. Therefore, it is important to continuously monitor the market and adjust pricing strategies accordingly in order to remain competitive.

The Risk of Being the Lower-Cost Producer of a Good