Question

Nathan owns a shoe company. He has found a process that allows him to produce high-quality shoes at a much lower price than his competitors. As a result, his sales have outperformed all of his rivals' for the past 12 months. What concept does this demonstrate?

Answer 1

Nathan's shoe company's success exemplifies the benefits of innovation in a market economy, resulting in higher profits and a temporary competitive edge.

Step-by-step explanation:

The concept demonstrated by Nathan's success in producing high-quality shoes at lower prices and consequently outperforming his competitors' sales is the benefit of innovation in a market-driven economy. His approach to gaining competitive advantage through a unique production process illustrates how a firm can achieve higher profits by enhancing production efficiency or by offering desirable product characteristics. This competitive edge allows businesses like Nathan's to enjoy above-normal profits temporarily until other competitors are able to catch up with similar innovations or cost efficiencies.