Companies considering new cost-cutting manufacturing processes often compare the projected results of making the investment against the alternative of not making the investment with costs, selling prices, and share of market remaining constant. Which of the following, assuming that each is a realistic possibility, constitutes the most serious disadvantage for companies of using the method above for evaluating the financial benefit of new manufacturing processes?

Question

Examsnet · Accepted Answer

Correct Answer is : Competitors that do invest in a new process might reduce their selling prices and thus take market share away from companies that do not.

GMAT Verbal Reasoning Practice Test 3