Marzella Corp

question 10

Multiple Choice

Marzella Corp. is analyzing a project that involves expanding the firm into a new product line. The project includes the construction of a new manufacturing facility and also creating a new distribution system. The project's financial projections will tend to have which one of the following characteristics if the person compiling those projections suffers from overoptimism?

• A)over estimated construction costs
• B)over estimated expenses
• C)over estimated net present values
• D)under estimated profits
• E)under estimated sales estimates

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Definitions:

Excess Demand

A situation in which the demand for a product or service surpasses its supply in a market, often leading to price increases.

Market Equilibrium

A situation where the quantity of a good or service supplied equals the quantity demanded at a specific price level.

Excess Demand

A scenario in which the current price of a product or service leads to a demand that surpasses its available supply.

Excess Supply

Occurs when the quantity of a good or service offered by producers exceeds the quantity demanded by consumers at the current price.