The learning curve may not be permanent; it can be disrupted by changes in process, personnel, or product

Which of the following is a result of certain products having small national markets, in the absence of trade?

A. The variety of products available to consumers increases. B. Limited demand for such products leads to non-realization of economies of scale. C. Each nation will specialize in producing a narrower range of products than it would in the presence of trade. D. At low volumes of production, unit costs and prices would be lowered. E. The first movers in an industry may get a lock on the world market that discourages subsequent entry.

Company K is considering two mutually exclusive projects. The cash flows of the projects are as follows:

Year Project A Project B 0 -$2,000,000 -$2,000,000 1 500,000 2 500,000 3 500,000 4 500,000 5 500,000 6 500,000 7 500,000 5,650,000 a. Compute the NPV and IRR for the above two projects, assuming a 13% required rate of return. b. Discuss the ranking conflict. c. What decision should be made regarding these two projects?