Question

Larry Linsuine is thinking of marketing a new idea he has been using. After years of experience as a deer hunter, he has perfected a tree stand that gives him an added advantage in deer hunting. He calls his new tree stand The Tree Hugger. He has now begun the process of manufacturing his tree stands with 20 employees working out of his garage. His life savings have provided the equity for his operation.

What advantage will Larry have over his competition with his new product?
a. competitive advantage
b. comparative advantage
c. qualitative advantage
d. financial advantage

Answer 1

Larry Linsuine's new tree stand, The Tree Hugger, would likely offer him a comparative advantage in the market due to his unique expertise and potentially more efficient production methods.

Step-by-step explanation:

Larry Linsuine would most likely have a comparative advantage with his new product, The Tree Hugger. A comparative advantage occurs when a producer can make a product at a lower opportunity cost than competitors, which allows them to sell their product at a more competitive price or with better margins. In the scenario provided, if Larry has been able to perfect his tree stand through his years of experience in a way that competitors cannot easily replicate or if he has found a more cost-effective manufacturing process, then he would have a comparative advantage. This advantage comes from utilizing his personal skills and knowledge about deer hunting, allowing him to produce a tree stand that better meets the needs of hunters. Larry's life savings investment also indicates commitment but does not necessarily confer a financial advantage as this merely concerns the equity available for his business operations.