Which of the Following Statements Regarding Diversification Analysis Is Most

question 58

Multiple Choice

Which of the following statements regarding diversification analysis is most accurate?

• A) Companies should only use diversification analysis if they are well-established; new companies that use this process run the risk of trying to do too much too soon.
• B) For any product, there is both a current and a new market and for any market, there is both a current and a new product.
• C) Most companies discover that there is at least one product that is targeted to the wrong market.
• D) Diversification analysis is only effective for consumer products.
• E) Diversification analysis is used to forecast and calculate industry sales for new products.

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Definitions:

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, representing the extra satisfaction or utility gained.

Market Price

is the current price at which a product, security, or commodity can be bought or sold in a marketplace.

Value

An individual’s value for a good or service is the amount of money he or she is willing to pay for it.

Law of Diminishing Marginal Value

, also known as the Law of Diminishing Marginal Utility, states that as a person consumes more of a product, the satisfaction or utility from consuming each additional unit declines.