When Diversification Involves Additions of a Business Related to the Firm

question 49

Multiple Choice

When diversification involves additions of a business related to the firm in terms of technology,markets or products,it involves:

• A) Concentrated growth
• B) Horizontal integration
• C) Concentric diversification
• D) Vertical diversification

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Definitions:

Variable Costs

Expenses that change in proportion to the activity of a business, such as sales volume or production levels.

Fixed Expenses

Costs that do not fluctuate with the volume of production or sales, such as rent, salaries, and insurance premiums.

Target Profit

The amount of net income a business aims to achieve within a specific period.

Break-Even Point

The level of production or sales at which total revenues equal total expenses, resulting in no net profit or loss.