The wedge definition of competitive advantage states that the wedge between customer willingness-to-pay and the firm's cost is wider than competitors.

• A. The wedge between willingness-to-pay and cost is wider for your firm than for rivals.
• B. The wedge refers to marketing budget.
• C. The wedge does not relate to profitability.
• D. The wedge is always negative.

Answer: (A)

The main idea here is that competitive advantage can be seen in how much value you capture from each sale. The wedge is the difference between what customers are willing to pay and what your firm spends to deliver the product. When this wedge is wider for your firm than for competitors, you’re earning more profit per unit — either by charging more for the same value, or by delivering the same value more cheaply, or both. That higher per-unit profit gives you a stronger competitive position and more ability to invest in keeping or widening that edge.

So the statement that best describes the wedge is that it is wider for your firm than for rivals, meaning you have greater profitability per unit.

Why the other ideas don’t fit: the wedge is not about marketing budget; it’s about value capture per unit. It does relate to profitability, since a larger wedge means more profit per sale. And it isn’t inherently negative; a positive wedge indicates profitability, while a negative wedge would imply losses on each unit.