When Customers Face Significant __________, the Demand for the Existing

question 72

Multiple Choice

When customers face significant __________, the demand for the existing product becomes more inelastic.

• A) network costs
• B) bandwagon costs
• C) switching costs
• D) staying costs
• E) marginal costs

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Definitions:

Equity Costs

The cost of obtaining capital through the sale of shares in the company, including dividends payouts and the dilution of share value.

Debt Costs

The total expenses involved in borrowing money, including interest payments and fees.

Flotation Costs

The expenses incurred by a company in issuing new securities, including legal, accounting, and underwriting fees.

WACC

Abbreviation for Weighted Average Cost of Capital, a calculation of a firm's cost of capital in which each category of capital is proportionately weighted, reflecting the cost of each type of capital (debt, equity, etc.) to the overall business.