The average cost of production for a bottle of vitamin water in the industry is $4 while its average price is $7. StoreAll Inc. manufactures the same product for $3 per bottle and sells it for $7 per bottle. Which of the following statements is most likely true of StoreAll Inc. in this scenario?
A) It has a competitive advantage in the industry.
B) It has a competitive disadvantage in the industry.
C) It has competitive parity with other firms in the industry.
D) It has formed a strategic alliance with other firms in the industry.

Question

Quizplus · Accepted Answer

StoreAll Inc. most likely has a competitive advantage in the industry. A firm that achieves superior performance relative to other competitors in the same industry or the industry average has a competitive advantage.

The Average Cost of Production for a Bottle of Vitamin