Which of the Following Statements Is CORRECT

question 58

Multiple Choice

Which of the following statements is CORRECT?

• A) if a firm is found guilty of cannibalization in a court of law, then it is judged to have taken unfair advantage of its customers. thus, cannibalization is dealt with by society through the antitrust laws.
• B) if cannibalization exists, then the cash flows associated with the project must be increased to offset these effects. otherwise, the calculated npv will be biased downward.
• C) if cannibalization is determined to exist, then this means that the calculated npv if cannibalization is considered will be higher than the npv if this effect is not recognized.
• D) cannibalization, as described in the text, is a type of externality that is not against the law, and any harm it causes is done to the firm itself.
• E) if a firm is found guilty of cannibalization in a court of law, then it is judged to have taken unfair advantage of its competitors. thus, cannibalization is dealt with by society through the antitrust laws.

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Definitions:

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