Final answer:
The assertion that minimal customer focus leads to reduced marketing and sales costs is false. Customer focus is essential for market success and long-term profitability. Moreover, majority rule may not yield a clear preference with multiple options, and in competitive markets, firms base short-run operation decisions on price relative to minimum average variable costs.
Step-by-step explanation:
The statement "Minimal customer focus results in a reduction in the cost of marketing and sales" is false. While it might seem that less focus on customers could reduce expenses in the short term, it typically leads to a decrease in customer satisfaction, loyalty, retention, and ultimately, sales. In a competitive market, customer focus is critical for brand differentiation and long-term profitability.
Concerning the concept of majority rule, it is true that majority rule can fail to produce a single preferred outcome when there are more than two choices. This is known as the Condorcet paradox in social choice theory where, despite individual preferences being consistent, collective preferences can be cyclic and intransitive, thus not leading to a clear winner.
In perfectly competitive markets, the determination of whether a firm should stay in business or shut down in the short run is based on its costs and revenues. Specifically, if the price is less than the minimum average variable cost, the firm should shut down to minimize losses. Conversely, if the price is greater than or equal to the minimum average variable cost, it is in the firm's best interest to stay in business, as they can cover their variable costs and contribute to paying off fixed costs.