The "Death-Spiral" Effect Refers To

question 71

Multiple Choice

The "death-spiral" effect refers to:

• A) The allocation of fixed overhead costs over time to an increasing volume of output.
• B) A possible consequence when variable, not full, costing is used.
• C) A likely consequence when fixed overhead allocation rates are based on practical capacity.
• D) The continual raising of prices, in response to decreases in sales volume, in an attempt to recover fixed costs.
• E) Increases in product demand over time in response to increases in fixed promotional costs.

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Definitions:

Right of First Denial

The Right of First Denial is a contractual right that allows a party to be the first to be offered an opportunity to purchase goods, services, or assets before the offering is made available to others. This term might be confused with "Right of First Refusal" which is commonly used to describe a similar concept.

Franchise Agreement

A legal contract between a franchisor and franchisee, outlining terms for the franchisee to operate under the franchisor's brand and system.

Franchisee

An individual or company that holds the right to operate a franchise, selling goods or services under a franchisor's brand.

Franchisor

A franchisor is a business entity that grants the right to use its trademark or business model to other businesses (franchisees) in exchange for a fee.