Question

In the context of the competitive environment of a business, the best measure of value is the:

a. difference in the market price and the selling price of a product.
b. total number of returning customers per quarter.
c. size of the gap between product benefits and price.
d. relative difference in the selling price of a product across competitors.

Answer 1

C. size of the gap between product benefits and price

Step-by-step explanation:

I will use a scenario to explain this. Let's say that there is 2 machines. Machine A and Machine B.

- The cost of Machine A is $10,000. You can make around 2000 units of goods with it.

- The cost of Machine B is $50,000. You can make around 5000 unites of goods with it.

From the sample above, we can say that machine B is definitely better than machine A in terms of performance. BUT, machine A held more value compared to machine B.

To produce 1 units of goods, you need to sacrifice around $5 with machine A. If you use machine B, you need to sacrifice around $10 for a single good