Which of the following is a major avenue for achieving a cost advantage over rivals in competitive markets?

• A. Increasing advertising expenditures
• B. Raising prices above the market equilibrium
• C. Using more efficient production technologies
• D. Offering more product variety

Answer: (C)

Verified step by step guidance

1. Understand the concept of cost advantage: In microeconomics, a cost advantage means a firm can produce goods or services at a lower cost than its competitors, allowing it to either lower prices or increase profit margins.
2. Evaluate each option in terms of cost advantage: Increasing advertising expenditures typically raises costs and does not directly reduce production costs.
3. Raising prices above the market equilibrium usually leads to losing customers and is not a strategy for cost advantage; it relates more to pricing strategy.
4. Using more efficient production technologies directly reduces the cost per unit of output by improving productivity or lowering input usage, which is a classic way to achieve a cost advantage.
5. Offering more product variety may attract more customers but often increases costs due to complexity and does not inherently reduce production costs.