Which of the following statements is true of cost advantage?
A)Large firms are guaranteed to secure a wide cost advantage.
B)Size and scale do not always guarantee a cost advantage.
C)Firms with high production volumes are sure to gain a cost advantage.
D)Firms which produce standardized products have a cost advantage.

Question

Quizplus · Accepted Answer

While size and scale can contribute to a cost advantage, it is not a guarantee. Efficiency and effective cost management are also important factors in achieving cost advantage. Therefore, choice B is the correct statement. The other choices make overly general and sweeping statements that do not always hold true.

Which of the Following Statements Is True of Cost Advantage