1. Which of the following is an advantage or pursuing cost leadership:

a. Sales always increase with increasing amounts of output

b. Loss of sales does not reduce scale benefits

c. Strategy easily accommodates changes in the market

d. Firms invest heavily in differentiating their products

e. A firm may charge the same price as its competitors but make greater profits

2. A company that has successfully executed a differentiation strategy typically can use which of the follow tactics (Check all that apply, you may need to check more than one for full credit!):

a. Win a price war (as long as their balance sheet is strong enough).

b. Lower their prices below competitors and gain market share

c. Match their competitors' prices and reap higher profits

d. Match their competitors' prices and gain market share

e. Raise prices above competitors and reap higher profits.