Which of the Following Statements Is CORRECT

question 30

Multiple Choice

Which of the following statements is CORRECT?

• A) If a firm is found guilty of cannibalization in a court of law,then it is judged to have taken unfair advantage of its competitors.Thus,cannibalization is dealt with by society through the antitrust laws.
• B) If a firm is found guilty of cannibalization in a court of law,then it is judged to have taken unfair advantage of its customers.Thus,cannibalization is dealt with by society through the antitrust laws.
• C) If cannibalization exists,then the cash flows associated with the project must be increased to offset these effects.Otherwise,the calculated NPV will be biased downward.
• D) If cannibalization is determined to exist,then this means that the calculated NPV if cannibalization is considered will be higher than the NPV if this effect is not recognized.
• E) Cannibalization,as described in the text,is a type of externality that is not against the law,and any harm it causes is done to the firm itself.

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Definitions:

Instant Glucose

A quick-dissolving sugar supplement used to raise blood sugar levels rapidly, often used in treating hypoglycemia.

National Safety Council

An organization in the United States that focuses on promoting safety in the home, workplace, and on the road through leadership, research, education, and advocacy.

American Heart Association

A nonprofit organization in the United States that fosters appropriate cardiac care in an effort to reduce disability and deaths caused by cardiovascular disease and stroke.