If a Single Firm Can Meet the Entire Market Demand

question 362

Multiple Choice

If a single firm can meet the entire market demand at a lower average total cost than a larger number of smaller firms,the single firm is

• A) price discriminating.
• B) a natural monopoly.
• C) a legal monopoly.
• D) efficient when profit maximizing.
• E) an ownership-of-the-market monopoly.

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Definitions:

Consolidated Financial Statements

Financial statements that combine the financial information of a parent company and its subsidiaries into one comprehensive document.

Transfer Profit

Income generated from the internal sale or transfer of goods or services within different segments of the same company.

Intra-Entity Gross Profit

The profit realized from transactions that occur within different parts of the same company, often eliminated during consolidation to prevent overstated financial performance.

Consolidation Worksheet

A tool used in preparing consolidated financial statements, helping in the elimination of intercompany transactions and balances.