Which of the Following Sources of Conglomerate Value Creation Explains

question 3

Multiple Choice

Which of the following sources of conglomerate value creation explains GE CEO Jeff Immelt's assertion that the businesses "fit together to grow consistently through the cycles"?

• A)Use of internal capital markets
• B)Economies of scale and scope
• C)Economizing on transaction costs
• D)Dominant general management logic
• E)Identifying undervalued firms

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Definitions:

Normal Good

A type of good for which demand increases when income increases, and falls when income decreases, but price remains constant.

Income Range

The spectrum of income levels, from the lowest to the highest, that exists within a given population or among a specific group of individuals.

Substitution Effect

The economic principle that as the price of a good increases, consumers will replace it with cheaper alternatives.

Income Effect

The variation in income for a person or an economy and its impact on the demand for a specific good or service.