Which of the following could be considered an example of a competitive advantage in a competitive market?

• A. A firm sets prices above the market equilibrium.
• B. A firm ignores consumer preferences when designing its products.
• C. A firm has lower production costs than its rivals due to advanced technology.
• D. A firm faces higher input costs than its competitors.

Answer: (C)

Verified step by step guidance

1. Understand the concept of competitive advantage: it refers to a firm's ability to produce goods or services at a lower cost or with better quality than its competitors, allowing it to achieve superior performance in the market.
2. Analyze each option in the context of competitive advantage:
3. - Setting prices above the market equilibrium is generally not sustainable in a competitive market because consumers will buy from competitors offering lower prices.
4. - Ignoring consumer preferences typically leads to lower demand, which is not an advantage.
5. - Having lower production costs due to advanced technology means the firm can produce more efficiently, which is a clear competitive advantage.
6. - Facing higher input costs than competitors is a disadvantage, not an advantage.