A disadvantage of overinvestment is that the incumbent firm builds capacity it never uses, which is

Question

Quizplus · Accepted Answer

Overinvestment can lead to the creation of excess capacity that the incumbent firm may never use, which could be considered wasteful of resources. This can lead to a decrease in profitability and lower return on investment. Therefore, A is the best choice. On the other hand, B and C are incorrect as they do not accurately describe the consequences of overinvestment.

A Disadvantage of Overinvestment Is That the Incumbent Firm Builds