Positive NPV Projects May Originate from Cost Saving Projects Such

question 92

Multiple Choice

Positive NPV projects may originate from cost saving projects such as those that

• A)reduce economies of scale.
• B)reduce product differentiation.
• C)reduce absolute cost advantages.
• D)fail to exploit advantages in distribution channels.
• E)none of the above statements are correct

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Definitions:

Diminishing Marginal

A principle stating that as additional units of a variable input are added to a fixed input, the additional output produced from each new unit will eventually decline.

Indifference Curves

A graphical representation of different combinations of goods or services among which a consumer is indifferent, showing preferences and trade-offs.

Completeness

In the context of preferences, the assumption that any two bundles of goods can be compared, meaning a consumer can decide if one is preferred, the other is preferred, or they are valued equally.

Transitivity

The concept in decision theory and economics that if preference or choice A is preferred to B, and B is preferred to C, then A must be preferred to C.