When a Firm Issues 50,000 Shares with a Par Value

question 55

Multiple Choice

When a firm issues 50,000 shares with a par value of $5 for $22 per share,additional paid-in capital will:

• A) decrease by $250,000.
• B) increase by $250,000.
• C) increase by $850,000.
• D) increase by $1,100,000.

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Definitions:

Low Entry Barriers

Conditions that make it easy for new competitors to enter an industry, typically leading to increased competition.

Collusion

A non-competitive, secret agreement between rivals to limit competition, set prices, or control market shares.

Four-Firm Sales Concentration Ratio

The percentage of total industrial sales accounted for by the four largest firms within a specific market, used to measure the degree of market concentration.

Geographic Concentration

The phenomenon of economic activity or specific industries clustering in specific regions or areas.