Answer:
Cyclical firms have sales that are more sensitive to the business cycle compared to non-cyclical firms, as they operate in industries more influenced by economic fluctuations. The correct multiple-choice option is (a).
Step-by-step explanation:
The sales of cyclical firms are more sensitive to the business cycle than are the sales of non-cyclical firms. Cyclical firms operate in industries that are heavily influenced by the economic fluctuations of the business cycle, such as the automobile, housing, and luxury goods sectors. When the economy is growing, cyclical firms often see an increase in sales, and conversely, during economic downturns, their sales are more likely to suffer.
Non-cyclical firms, sometimes referred to as defensive firms, deal in products or services always in demand, such as utility companies, healthcare providers, or consumer staples like food and hygiene products, and are less influenced by economic cycles. The correct multiple-choice option is (a).