If Two Merged Firms Are Shown to Have a Higher

question 19

Multiple Choice

If two merged firms are shown to have a higher combined market value than the sum of their individual market values, then:

• A) economic gains are said to have taken place.
• B) the firms were previously underpriced.
• C) the merger provides diversification to investors.
• D)there is no cost involved in the merger.

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Definitions:

Marginal Product

The additional output that results from using one more unit of a particular input, keeping all other inputs constant.

Labor-Supply Curve

A graph that shows the relationship between the wages workers receive and the amount of labor they are willing to supply.

Wage Affected

The impact on employees' earnings due to various factors like inflation, demand for labor, or changes in government policy.

Marginal Product

The growth in production resulting from one more unit of input.