Final answer:
Low-cost leaders in business aim to minimize costs and maximize profits through innovation and efficient production models. High tech industries often represent decreasing cost markets due to rapid technology advancements. Firms like Amazon achieve competitive pricing through refined cost structures, benefitting from economies of scale.
Step-by-step explanation:
Low-cost leaders in an industry are firms that manage to maintain the lowest costs while still providing products or services that are acceptable to customers. These firms are often successful because they can drive down their expenses through various strategic initiatives, such as utilizing advances in technology or investing in their workforce's education. For example, high tech industries are typically at the forefront when it comes to decreasing cost markets due to constant technological improvements.
Moreover, an innovative firm aims to maximize profits by producing more cost-effectively or delivering products that meet consumer needs in unique ways. A notable case is Samsung, with its CEO Gregory Lee emphasizing the importance of innovation for gaining a competitive advantage that translates into higher profits. Similarly, companies like Amazon exemplify how a refined production model and cost structure can lead to price reductions that challenge the competition, providing insights into price and output determination for both large and small firms.
In a decreasing cost industry, market expansion leads to reduced production costs for all firms, thereby setting a new equilibrium with lower prices. This trend is made possible by factors such as industry-wide technological upgrades or enhanced skill sets among employees, which collectively contribute to falling average total costs.