Ever-Improving Levels of Efficiency Enhance Profit Margins for a Cost-Leader

question 9

Multiple Choice

Ever-improving levels of efficiency enhance profit margins for a cost-leader. This effects which of the five forces of industry structure most directly?

• A) Potential entrants
• B) Substitutes
• C) Buyer power
• D) Supplier power

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Definitions:

Capital Cost Allowance

A taxable expense in Canada that allows a business to deduct the cost of a capital asset over time.

Half-Year Rule

A tax rule in some jurisdictions that allows only half the usual depreciation expense deduction in the year that a capital asset is acquired.

Straight-Line

A method of calculating depreciation of an asset which assumes the asset depreciates equally over its useful life.

Tax Basis

The value of an asset for tax purposes, used to calculate capital gains or losses upon disposition of the asset.