Economic theory suggests that ___________ the likelihood of discovering a positive NPV project.
A) the more competitive the market, the higher
B) there is a positive relation between the competitiveness of a market and
C) the competitiveness of a market has an indirect impact on
D) the competitiveness of a market has an insigniﬁcant impact on
E) competitive markets decrease

Question

Quizplus · Accepted Answer

In competitive markets, the likelihood of discovering a positive NPV project decreases because competition drives prices down and erodes profit margins, making it harder to find projects that exceed the cost of capital.

Economic Theory Suggests That ___________ the Likelihood of Discovering a Positive