Which of the Following Is a Limitation in Using Profitability

question 16

Multiple Choice

Which of the following is a limitation in using profitability as the sole measure of performance?

• A)Profit is linked to diminishing returns to scale and is a misrepresentation of true performance.
• B)Profit is a short-term measure and can be manipulated by taking actions that may prove dysfunctional in the longer term.
• C)Profit produces externalities,which invariably have a negative effect on the environment.
• D)Profits cannot account for the network effects that are generated by multiple users in diverse locations.