Advocates of Financial Modeling of Product Design Projects Argue That

question 18

Multiple Choice

Advocates of financial modeling of product design projects argue that:

• A) financial analysis focuses on measurable quantities only.
• B) financial analysis brings discipline and control to the product development process.
• C) sufficiently rigorous financial analysis can accurately forecast the product's profit potential.
• D) financial analysis is as solid as the assumptions that go into the model.
• E) financial analysis nurtures innovation and creativity.

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Definitions:

Substitution Bias

A bias in measuring the cost of living or inflation that arises from the substitution of relatively cheaper goods for more expensive ones by consumers.

Basket of Goods

A fixed set of products and services, used to monitor changes in price levels over time to measure inflation.

Inflation Rate

The percentage increase in the price level of goods and services in an economy over a period of time, reflecting a reduction in purchasing power.

Consumer Price Index

An indicator quantifying the mean variation over periods in the financial commitments urban consumers make towards a particular set of consumer goods and services.