Which of the Following Is a Valid Criticism of the Reduction

question 40

Multiple Choice

Which of the following is a valid criticism of the reduction of competition that results from corporate mergers?

• A) merged firms generally are as efficient and innovative as they can be
• B) consumers will have greater access to lower priced goods and services
• C) merged firms can increase price and maintain permanently higher profits
• D) merged firms are better positioned to take advantage of economies of scale

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Definitions:

Margin Of Safety

The difference between actual or expected sales and the break-even point, indicating the level of risk in failing to cover fixed costs.

Breakeven

The point at which total costs and total revenue are equal, resulting in no net loss or gain.

Sales

The exchange of a commodity or service for money; the action of selling something.

Variable Costing

A costing method that includes only variable manufacturing costs (direct materials, direct labor, and variable manufacturing overhead) in product costs and treats fixed manufacturing overhead as a period expense.