Suppose Price Decreases from $27

question 48

Multiple Choice

Suppose price decreases from $27.00 to $13.00. Using the mid-point formula, what is the percentage change in price?

• A) −0.35 = −35 percent
• B) −0.7 = −70 percent
• C) 0.7 = 70 percent
• D) 0.14 = 14 percent.

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Definitions:

Cannibalization

The situation where a new product eats into the sales of one of the company's existing products, potentially reducing overall sales.

Net Present Value (NPV)

A valuation method used to assess the profitability of an investment by calculating the present value of expected future cash flows minus the initial investment cost.

Externality

A consequence of an industrial or commercial activity that affects other parties without this being reflected in market prices, often considered as either positive or negative.

Capital Cost Allowance (CCA)

A tax deduction available in Canada for depreciable property that can be used to reduce taxable income.