A Key Risk of Acquisitions Is That a Firm May

question 18

True/False

A key risk of acquisitions is that a firm may substitute an ability to buy innovations for an ability to produce innovations internally.

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Definitions:

Fixed Cost

This is a cost that does not change with an increase or decrease in the amount of goods or services produced or sold.

Diminishing Returns

An economic principle stating that adding an additional factor of production results in smaller increases in output after a certain point.

Marginal Output

The additional quantity of output that is produced by using one more unit of a given input.

Negative Returns

Occurs when a company or investment loses more money than it earns or when costs exceed revenues.