The Growth Phase of the Product Life Cycle Is Always

question 63

Multiple Choice

The growth phase of the product life cycle is always dynamic. Which of the following does NOT occur in this phase?

• A) Profits increase as sales increase.
• B) Profits increase as economies of scale are attained.
• C) Some new competitors may enter the market with similar products.
• D) Some competitors will exit in an industry shakeout.
• E) Price competition with protracted price wars erodes profits.

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Definitions:

Present Value of Annuity

The current worth of a stream of equal payments made at regular intervals, discounted at a specific interest rate.

Capital Investment Evaluation Methods

Techniques used to assess the value and potential return of investments a business makes in long-term assets, including net present value, return on investment, and payback period analysis.

Average Rate of Return on Investment

A financial metric that compares the amount of profit expected or gained from an investment relative to its cost.

Net Present Value

A method used in capital budgeting to evaluate the profitability of an investment, calculated as the difference between the present value of cash inflows and the present value of cash outflows over a period of time.