How Does the Court's Decision in Deloitte & Touche V

question 61

Multiple Choice

How does the court's decision in Deloitte & Touche v Livent Inc impact the liability of auditors in Canada?

• A) Auditors will normally be liable only to their clients.
• B) Auditors are now liable to anyone who relies on their audited financial statements.
• C) Auditors can only be sued for breach of contract and not for negligent misstatement.
• D) Auditors are not liable for pure economic loss.

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Definitions:

MC = P

A condition in economics where marginal cost equals price, often indicating the point of profit maximization for firms.

Monopolistic Competition

A market structure characterized by many firms selling products that are similar but not identical, allowing for significant influence over pricing.

Product Differentiation

The process of distinguishing a product or service from others, to make it more attractive to a particular target market.

MC = P

A formula indicating that in perfect competition, the price (P) is equal to the marginal cost (MC) of producing an additional unit.