The Elimination Principle Illustrates the Idea That

question 85

Multiple Choice

The elimination principle illustrates the idea that:

• A) above-normal profits will be eliminated by decreases in demand due to high prices.
• B) losses will be eliminated by the innovation of new products.
• C) above-normal profits will be eliminated by the entry of new firms into the industry.
• D) losses will be eliminated by firms decreasing their costs.

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Definitions:

Unbiased Managers

Refers to managers who make decisions without prejudice or favoritism, aiming for fairness and objectivity in business operations.

Terminal Value

The estimated value of a business at the end of a specific period, considering all future cash flows discounted back to present value.

Detailed Forecast Period

An extended timeframe over which detailed predictions about a company's financial performance, including revenue and expenses, are made.

Economic Conditions

Refer to the current state of the economy in a specific region, encompassing factors like inflation rate, employment levels, GDP growth, and overall market health.