Selected Data from Division a of Green Company Are as Follows

question 24

Multiple Choice

Selected data from Division A of Green Company are as follows:
$\begin{array}{lcc}\text { Sales } & \$ & 500,000 \\\text { Average investment } & \$ & 300,000 \\\text { Operating income } & \$ & 60,000 \\\text { Minimum rate of return } & & 15 \%\end{array}$ Division A's residual income (RI) is:

• A)$15,000.
• B)$24,000.
• C)$30,000.
• D)$36,000.
• E)$54,000.

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Definitions:

Cournot Model

An economic model that describes an industry structure in which companies compete on the quantity of output they will produce, assuming that each firm's output decision affects the market price.

Perfectly Competitive

A market structure characterized by a large number of small firms, a homogenous product, and free entry and exit, leading to price taking behavior.

Price-leadership Model

An economic concept where one or more dominant firms set their prices, and other, smaller firms in the industry then follow by setting the same or similar prices.

Dominant Firm

A company that holds a large portion of the market share within its industry, exerting significant influence or control over market conditions, including prices and product offerings.