A firm's strategic position is determined by the relationship of which two variables?

• A. Revenue and profit
• B. Price and cost
• C. Supply and demand
• D. Marginal utility and total utility

Answer: (B)

Verified step by step guidance

1. Understand that a firm's strategic position in microeconomics is primarily determined by how it manages its pricing relative to its costs.
2. Recognize that 'Price' refers to the amount a firm charges for its product or service, while 'Cost' refers to the expenses incurred in producing that product or service.
3. Analyze how the difference between price and cost affects the firm's profitability and competitive advantage in the market.
4. Note that other options like revenue and profit, supply and demand, or marginal utility and total utility relate to different economic concepts but do not directly define a firm's strategic position.
5. Conclude that the relationship between price and cost is fundamental because it influences the firm's ability to compete, set strategies, and achieve sustainable profits.