Which of the Following Is a Risk a Company Takes

question 136

Multiple Choice

Which of the following is a risk a company takes when building a strategy around the experience curve?

• A) Competitors will likely not be able to meet the company's price cuts.
• B) Existing technologies are likely to become more expensive as the company expands.
• C) The method does not take competitors' prices into account.
• D) The method may cause consumers to become frustrated with changing prices.
• E) Aggressive pricing may give the product a cheap image, causing customers to lose interest.

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Definitions:

Prepaid Insurance

An asset account that represents insurance paid in advance, which is expensed as it is used or over time.

Accounts Payable

A liability account on a company's balance sheet representing money owed to creditors for goods and services purchased on credit.

Inventory

Items held for sale in the ordinary course of business, as well as materials and components that will be used in the production of goods to be sold.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value over time.