The Shoe Box Is Considering Adding a New Line of Winter

question 47

Multiple Choice

The Shoe Box is considering adding a new line of winter footwear to its product lineup.When analyzing the viability of this addition, the company should include all of the following in its analysis with the exception of:

• A)any expected changes in the sales levels of current products caused by adding the new product line.
• B)cost of new display counters for the additional winter footwear.
• C)increased taxes from winter footwear profits.
• D)the research and development costs to produce the current winter footwear samples.
• E)the expected revenue from winter footwear sales.

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Definitions:

Efficiency Gains

Improvements in the use of resources that allow for more output without increasing the input.

Natural Monopoly

A market condition in which a single firm can provide a product or service at a lower cost than any potential competitors, often due to economies of scale.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the scale of the operation increases.