Among the Value-Neutral Incentives to Diversify, Some Come from the Firm's

question 119

Multiple Choice

Among the value-neutral incentives to diversify, some come from the firm's external environment while others are internal to the firm. External incentives to diversify include:

• A) the fact that other firms in an industry are diversifying.
• B) pressure from stockholders who are demanding that the firm diversify.
• C) changes in antitrust regulations and tax laws.
• D) a firm's low performance.

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Definitions:

Quasilinear Utility Functions

Utility functions where consumers' utility is linear in one argument, typically representing money, allowing for easy analysis of changes in wealth.

Edgeworth Box

An Edgeworth Box is a visual representation used in microeconomics to show the distribution of resources or the optimal allocation between two individuals, demonstrating how both can benefit through trade.

Pareto Optimal Allocations

A condition of resource allocation where it's impossible to make any one individual better off without making at least one individual worse off, emphasizing the concept of efficiency in economic distribution without losses.

Edgeworth Box

A model used in economics to show how different allocations of goods or two goods can affect two individuals' utility levels.