Significant Influence of One Company Over Another Has Been Defined

question 92

Multiple Choice

Significant influence of one company over another has been defined by the accounting profession as the ownership of what minimum percent of the second company's stock?

• A)30%
• B)50%
• C)100%
• D)20%

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Definitions:

Substitution Effect

The economic principle that as the price of a good rises, consumers will replace it with cheaper alternatives, whereas if the price falls, the good will replace more expensive alternatives.

Economic Rent

Income derived from the ownership or control of a scarce resource, exceeding the income that would cause the resource to be brought into use.

Marginal Resource Cost

The additional cost incurred by acquiring one more unit of a resource.

Marginal Revenue Product

Marginal revenue product is the additional revenue generated from the use of one more unit of a variable input, holding other inputs constant.