Diversification Should

question 59

Multiple Choice

Diversification should:

• A)Be avoided
• B)Be a last resort
• C)Only be undertaken if it is genuinely expected to yield benefits
• D)All of the above

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Definitions:

Implicit Costs

The opportunity costs of using resources owned by the firm for its own production rather than earning income elsewhere.

Accounting Profits

The net income reported on the financial statements of a company, calculated as total revenues minus explicit costs and depreciation.

Industry Supply

The total quantity of a specific good or service that all firms in an industry are willing to sell at a given price level.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a specified time period.