Product Differentiation Can Be of Value to a Firm Because

question 84

Multiple Choice

Product differentiation can be of value to a firm because

• A)no other firm will be able to meet the same consumer need.
• B)the product will always be patented.
• C)some consumers with certain tastes will likely buy the product.
• D)money is often spent to develop a differentiated product.
• E)product differentiation lowers product prices for consumers.

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Definitions:

Incremental Cash Flows

Incremental cash flows are the additional operating cash flows that an organization receives from taking on a new project, used to analyze the profitability of that project.

Capital Investment

Funds invested in a firm or enterprise for the purpose of furthering its business objectives.

Stand-Alone Principle

Evaluation of a project based on the project’s incremental cash flows.

Equivalent Annual Cost

A financial analysis tool used to compare the cost effectiveness of different assets by breaking down their costs into equivalent annual amounts.