Question 1 answers
a. If a firm is found guilty of cannibalization in a court of law, then it is judged to have taken unfair advantage of its competitors. Thus, cannibalization is dealt with by society through the antitrust laws.
b. If a firm is found guilty of cannibalization in a court of law, then it is judged to have taken unfair advantage of its customers. Thus, cannibalization is dealt with by society through the antitrust laws.
c. If cannibalization exists, then the cash flows associated with the project must be increased to offset these effects. Otherwise, the calculated NPV will be biased downward.
d. If cannibalization is determined to exist, then this means that the calculated NPV considering cannibalization will be higher than the NPV that does not recognize these effects.
e. Cannibalization is a type of externality that is not against the law, and any harm it causes is done to the firm itself.
This question was asked on Mar 18, 2010.
Recently Asked Questions
- When considering how much of a product to produce or acquire for the period, describe the specific items you would use in the calculation? Your answer should
- Please refer to the attachment to answer this question. This question was created from Why must a mother. Additional comments: "Can you explain this using
- Explain the high low method including its calculation and the cost formula for total cost.