Jones & Co

question 22

Multiple Choice

Jones & Co.is a business concern in the process of being set up.Its promoters have entered into preincorporation contracts.After the corporation comes into existence,the promoters can be released from liability through:

• A)an agreement with the corporation wherein the corporation agrees that it will be substituted for the promoter.
• B)an agreement with the third party before adoption of the preincorporation agreement.
• C)an agreement with the corporation and third party wherein all three agree that the corporation will be substituted for the promoter.
• D)the preincorporation contract with the third party.

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Definitions:

MR = MC

Marginal Revenue equals Marginal Cost, a condition for profit maximization in firms, indicating optimal output level.

Monopolistically Competitive

A business environment where multiple organizations supply items that resemble each other but are not exact copies, enabling them to have some market dominance.

Marginal Revenue

The additional income from selling one more unit of a good; sometimes equal to price.

Marginal Cost

The extra charge incurred when making one more unit of a good or service.