Diversification Merits Strong Consideration Whenever a Single-Business Company

question 89

Multiple Choice

Diversification merits strong consideration whenever a single-business company

• A)has integrated backward and forward as far as it can.
• B)faces diminishing market opportunities and stagnating sales in its principal business.
• C)has achieved industry leadership in its main line of business.
• D)encounters declining profits in its mainstay business.
• E)faces strong competition and is struggling to earn a good profit.

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Definitions:

Oligopolistic Markets

Markets dominated by a small number of firms, leading to limited competition and potentially collaborative behavior.

Price Effect

The impact that a change in a good’s price has on its demand, considering both the substitution and income effects.

Oligopoly

A market structure in which only a few sellers offer similar or identical products.

Monopoly Outcome

A market situation where a single firm dominates production and sales, leading to potential inefficiency and higher prices.