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The point of this illustration is to show that performance demand can increase, which in turn decreases Performance Oversupply. https://images.squarespace-cdn.com/content/v1/51ec0cd1e4b0a4a7472c7982/1423450104417-WF3BFF72XWD2ES2LJT2H/Luck+%26+Randomness Blog - Disrupting the Innovator's Dilemma Luck and randomness is what happens in the dashed circle. Everything else in the larger circle is attributed to the productive efforts of the company. 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If you were wondering, I was calculating the Loss Carryforward and Carryback in this problem. https://images.squarespace-cdn.com/content/v1/51ec0cd1e4b0a4a7472c7982/1398650856045-A9NT4F66W4OWXFC05NW0/Excel+Spreadsheet Blog - The Best Apps for an Accountant An Excel spreadsheet with my cost accounting homework. https://images.squarespace-cdn.com/content/v1/51ec0cd1e4b0a4a7472c7982/1398651353332-2GI8NQN53R4V811L6K8P/Soulver Blog - The Best Apps for an Accountant That's correct. 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