Which of These Is True About the Cash Cow

question 70

Multiple Choice

Which of these is true about the cash cow?

• A) It generates tremendous profits in a rapidly growing industry.
• B) It has a small market share in a rapidly growing industry.
• C) It has a small market share in a slow growth industry.
• D) It has a large market share in a slow growth industry.
• E) It is generally a dead business that should be divested.

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Definitions:

Total Revenue

The total income earned by a firm from selling its products or services.

Demand Schedule

A presentation showing the level of demand from buyers for a product or service, matched to their willingness and ability to pay at various price scales.

Socially Optimal

Refers to the most efficient allocation of resources from society's point of view, where social welfare is maximized.

Economic Profits

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs, representing the gains from its operations.