An Important Reason for Acquisitions Is That the Combined Firm

question 5

Multiple Choice

An important reason for acquisitions is that the combined firm may generate greater revenue that the two separate firms could. Examples of revenue enhancement would not include:

• A) an elimination of a previously ineffective media effort.
• B) an elimination of a previously ineffective advertising effort.
• C) an elimination of a weak existing distribution effort.
• D) economies of scale.

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Definitions:

Monopolist

A monopolist is a single seller in a market who has significant control over the supply of a product or service, and thus can influence prices and market conditions.

Marginal Revenue

This is the increase in revenue that results from the sale of an additional unit of a product.

Marginal Cost

The change in total production cost that arises when the quantity produced is incremented by one unit.

Demand Curve

A diagram demonstrating how the price of an item correlates with the volume that consumers are ready to acquire at assorted prices.