Which of the Following Would Typically Be Considered a Downside

question 34

Multiple Choice

Which of the following would typically be considered a downside to geographical clustering?

• A) Firms may have to lower prices on their products because there are many local competitors serving the same market.
• B) Firms have to spend more on transportation costs for their inputs because suppliers are located far away.
• C) Firms in a region have lower net income because the tax rate in that region is very high.
• D) Firms may benefit by improvements in local infrastructure such as roads and utilities.

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Definitions:

Common Shares

Equity securities that represent ownership in a corporation, giving holders voting rights and a share in the company’s profits via dividends.

Internet Companies

Businesses that operate primarily on the internet, offering services or products through digital platforms, often focusing on technology, e-commerce, or social media.

Growth Opportunities

Potential scenarios or projects that can increase the profitability and size of a business.

Earnings Yields

The inverse of the price-to-earnings ratio, representing the earnings generated by a company per share relative to its share price, often used to compare the profitability of investments.