A Decrease in the Sales of a Current Project Because

question 39

Multiple Choice

A decrease in the sales of a current project because of the launching of a new project is:

• A)cannibalization.
• B)a sunk cost.
• C)an overhead expense.
• D)irrelevant to the investment decision.

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Definitions:

Organic

Pertaining to or derived from living organisms; in agriculture, involving food produced without the use of synthetic pesticides or fertilizers.

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium for a good or service is not achieved or is not achievable.

Profit-Maximizing

A strategy or approach aimed at achieving the highest possible profit from operations, often involving minimizing costs and maximizing revenues.

Negative Externality

A negative externality exists when a product or decision results in a negative effect on a third party not directly involved in the transaction.