When a New Product Has High Demand in the Market,how

question 91

Multiple Choice

When a new product has high demand in the market,how should a company react?

• A) Increase the supply of the product
• B) Decrease the supply of the product
• C) Reduce the price of the product
• D) Maintain the current supply until demand falls
• E) Create an artificial shortage of the product

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Definitions:

Profitability Index

A calculation that determines the relative profitability of an investment, calculated by dividing the present value of future cash flows by the initial investment cost.

Investment Projects

Initiatives undertaken by businesses or individuals that involve committing resources with the expectation of generating future financial returns.

Present Value

The current worth of a future sum of money or stream of cash flows, given a specified rate of return.

Cash Inflows

Refers to the money received by a business from its various sources, such as sales revenue, investment income, and financing.