An entrepreneur prices below a competitor even though costs are higher. What is the long-term solution?

Correct answer: Improve the cost structure or create a differentiated value proposition

A price below a high cost creates losses unless the cost structure is changed or another source of value supports the price. The business can improve efficiency, negotiate inputs, or offer distinctive quality, service, or convenience that customers value. Continuing losses or hiding defects is not sustainable. Therefore B is the appropriate long-term response.