A Winning Strategy Must Pass Which Three Tests

question 58

Multiple Choice

A winning strategy must pass which three tests?

• A) The Dominant Market Test,the Sustainable Advantage Test,and the Profit Test.
• B) The Fit Test,the Competitive Advantage Test,and the Performance Test.
• C) The Sustainable Advantage Test,the Fit Test,and the Profit Test.
• D) The Performance Test,the Dominant Market Test,and the Fit Test.
• E) The Fit Test,the Sustainable Advantage Test,and the Dominant Market Test.

Grasp the impact of depreciation, including straight-line and MACRS, on tax shields and cash flows.

Differentiate between operating leases and financial leases and understand their characteristics.

Identify the factors affecting the net advantage to leasing (NAL) and how to compute it.

Understand the implications of different CCA (Capital Cost Allowance) classes on leasing and purchasing decisions.

---

Definitions:

Industry Equilibrium

A state where industry supply equals demand, leading to stability in prices and quantities produced and consumed.

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, indicating a firm's surplus beyond the normal profit level.

Price-Searcher Market

A market structure where sellers have the ability to control or influence prices due to a lack of perfect competition.

Fast Food Market

The sector of the food service industry that specializes in food that can be prepared and served quickly.