Once a Firm Is Forced to Consider an External Cost,the

question 68

Multiple Choice

Once a firm is forced to consider an external cost,the price of its product will:

• A)increase and output will decrease.
• B)increase and output will increase.
• C)decrease and output will decrease.
• D)decrease and output will increase.

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Definitions:

Acquisition Differential

The difference between the cost of an acquisition and the fair value of net assets acquired, often recognized as goodwill on the balance sheet.

Patents

Legal rights granted by a government to an inventor for a limited time, giving exclusive rights to manufacture, use, or sell an invention.

Acquisition Differential

The difference between the purchase price of an acquired company and the book value of its net assets.

Acquisition Differential

The difference between the cost of the acquisition and the fair value of the net assets acquired in a business combination.