Firm X Acquires Another fiRm, Firm Y, That Supplies Its

question 18

Multiple Choice

Firm X acquires another firm, Firm Y, that supplies its raw materials. Raw materials are now transferred to the production division of Firm X. What is the optimum price that the production division at Firm X will pay for the raw materials?

• A) The average cost of producing the raw materials.
• B) The marginal cost of producing the raw materials.
• C) The average cost of acquiring Firm Y.
• D) The marginal cost of acquiring Firm Y.

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Definitions:

Acetylcholine

A neurotransmitter in both the peripheral and central nervous systems that plays a crucial role in muscle contraction and cognitive functions.

Parasympathetic

The parasympathetic nervous system is one of the two divisions of the autonomic nervous system, responsible for conserving energy and reducing bodily functions like heart rate.

Sympathetic

Feeling, showing, or expressing sympathy, understanding, or compassion towards others.

Somatic

Relating to or affecting the body, distinct from the mind.