The Competitive Test That a Business Plan Must Pass in Order

question 60

Multiple Choice

The competitive test that a business plan must pass in order to attract financing from lenders and investors involves proving:

• A) that the company can gain a competitive advantage over its key competitors.
• B) that the business venture will provide lenders and investors a high probability of repayment or an attractive rate of return.
• C) that a market for the company's product or service actually does exist and that the company can actually build it for the cost estimates included in the plan.
• D) that the industry in which the business will compete is growing faster than the overall economy and has room for more competitors.

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Definitions:

Equitable

Characterized by fairness and impartiality; the fair distribution of resources and opportunities.

Efficient

Describes a process that achieves its goals with the least waste of time and effort.

Lump-Sum Tax

A tax that is the same amount for every person.

Deadweight Loss

A cost to society created by market inefficiency, which occurs when supply and demand are out of equilibrium.