The _____ of a firm is measured by the difference between the value of a product to an average consumer and the average unit cost of producing that product.

Question

Quizplus · Accepted Answer

The definition provided in the question describes the concept of value creation, which is measured by the difference between the value a product provides to the customer and the cost of producing that product. Customer surplus refers to the additional value a customer receives from a product that exceeds the price they pay for it, and customer reservation refers to the highest price a customer is willing to pay for a product. Cost curve is a graphical representation of the relationship between the cost of producing a product and the quantity produced, whereas value efficiency is not a commonly used term in business or economics. Therefore, the best choice is B: value creation.

The _____ of a Firm Is Measured by the Difference