Firms That Pursue Extremely High or Extremely Low Levels of Diversification

question 43

True/False

Firms that pursue extremely high or extremely low levels of diversification perform better than those that pursue moderate levels of diversification.

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Definitions:

Avoidable Costs

Expenses that can be eliminated if a particular decision is made or if a particular activity is discontinued.

Irrelevant Costs

Costs that should not influence decision-making because they will not change regardless of the outcome.

Sunk Costs

Past expenditures that have already been incurred and cannot be recovered or altered by current or future actions.

Decision Making

Selecting a course of action from competing alternatives.