A Consolidation Is Defined as a Merger Wherein

question 224

Multiple Choice

A consolidation is defined as a merger wherein:

• A) One firm is completely absorbed by another firm.
• B) One firm acquires the assets, but not the liabilities, of another firm.
• C) Both the acquiring firm and the acquired firm cease to exist.
• D) At least 80 percent of the common stock of one firm is acquired by another firm.
• E) At least 51 percent of the common stock of one firm is acquired by another firm.

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Definitions:

Profit-Maximizing

The process or strategy by which a firm determines the price and output level that returns the greatest profit.

Monopolist

A market participant that is the sole provider of a good or service, giving them significant control over pricing and market conditions.

Variable Costs

Expenses that change in proportion to the activity of a business.

Marginal Costs

The additonal cost incurred by producing one more unit of a product or service.