Return on quality (ROQ)results when marginal revenues made possible by a higher quality product exceed the marginal costs of providing the higher quality.

Question

Quizplus · Accepted Answer

ROQ is a measure of the financial benefits of improving the quality of a product or service. It is calculated by subtracting the marginal cost of quality from the marginal revenue resulting from the improved quality. If the marginal revenue exceeds the marginal cost, then ROQ is positive and the firm has an incentive to invest in improving quality.

Return on Quality (ROQ)results When Marginal Revenues Made Possible by a Higher