In which of the following conditions would product market competitors' data be given more weight than data from labor market competitors?
A)Labor costs are a small share of total costs.
B)Employee skills are generic across all product markets.
C)Product demand is responsive to price changes.
D)The supply of labor is not responsive to changes in pay.

Question

Quizplus · Accepted Answer

When product demand is responsive to price changes, it indicates that customers are willing to switch to a competitor's product if the price is better. In such a scenario, the focus should be on analyzing data from product market competitors rather than labor market competitors. Labor costs may still be a significant cost factor, but if product demand is not sensitive to price changes, then competitors' labor market data can be given more weight. The other options do not provide a strong rationale for giving more weight to product market competitors' data.

In Which of the Following Conditions Would Product Market Competitors