Why Is Profitability Alone Not an Adequate Measure of a Project's

question 49

Essay

Why is profitability alone not an adequate measure of a project's value to an organization?

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Definitions:

Total Market Demand

The aggregate demand for a good or service across all consumers in a market at various price points.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the average cost per unit of output decreases with increasing scale.

Per-unit Cost

The cost incurred for producing a single unit of a product, which is calculated by dividing the total cost of production by the total number of units produced.

Monopolistic Firm

A company that has exclusive control over a particular market or industry, limiting competition.