Sensitivity Analysis on a Potential Project

question 68

Multiple Choice

Sensitivity analysis on a potential project

• A)is only useful to perform when there are firm calculations on the project available.
• B)is useful to perform when uncertainty exists and calculations are based on estimates.
• C)is designed to ensure that management is aware of all possible outcomes of the project.
• D)is designed to provide an escape-hatch for management should the project not succeed.

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Definitions:

Resources

Assets, materials, and inputs used to produce goods and services.

Purely Competitive Conditions

A theoretical market structure with many buyers and sellers, all small relative to the market, with no single entity able to influence price, leading to an efficient allocation of resources.

MPs

Abbreviation for Members of Parliament, who are elected to represent constituencies in the legislative body of a country.

Profit-Maximizing Equilibrium

The point at which a firm achieves the highest possible profit, where marginal cost equals marginal revenue.