In the Long-Run Equilibrium of a Competitive Market, the Number

question 175

Multiple Choice

In the long-run equilibrium of a competitive market, the number of firms in the market adjusts until the market demand is satisfied at a price equal to the minimum of

• A)average fixed cost for the marginal firm.
• B)marginal cost of the marginal firm.
• C)average total cost of the marginal firm.
• D)average variable cost of the marginal firm.

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Definitions:

Goodwill

An intangible asset that represents the excess of purchase price over the fair value of identifiable net assets of an acquired business.

Acquisition Differential

The disparity between what was paid to acquire a company and the net worth of its clearly identified assets adjusted for their fair market value.

Consolidated Balance Sheet

A statement of the combined assets, liabilities, and shareholders' equity of a parent company and its subsidiaries.

Equity Method

A method of accounting for an investment, in which the investment is initially recognized at cost and adjusted thereafter for the post-acquisition change in the investor's share of net assets of the investee.