Question

Both Bison Autos and Sparrow Inc. incur a cost of $9,000 to manufacture a vehicle. However, the economic value created by Sparrow Inc. is more than that created by Bison Autos. What does this indicate?A) Bison Autos has created a higher value gap than Sparrow Inc.B) Sparrow Inc. can charge a premium price on its automobiles.C) Bison Autos has a competitive advantage over Sparrow Inc.D) Both Bison Autos and Sparrow Inc. have achieved competitive parity.

Answer 1

Answer: B.Sparrow inc can charge a premium price on its Automobiles.

Step-by-step explanation:

Sparrow inc can charge a premium price on its Automobiles.

Economic Value is simple the amount of money an economic agent is willing to pay for a good or a service. When both companies incur same amount of costs, for a company to create higher economic value the price must be higher (premium price) or consumers (economic agents) are willing and able to pay premium price for sparrow inc automobiles