The Business Activities of Firm a Confer Positive Externalities on Firm

question 378

Multiple Choice

The business activities of Firm A confer positive externalities on Firm B, and the business activities of Firm B confer positive externalities on Firm A. If the two firms merged, then

• A)their respective markets would move closer to the social optimum.
• B)their respective markets would move further away from the social optimum.
• C)total surplus in their respective markets would decrease.
• D)the merger would serve as an example of a misguided public policy toward externalities.

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Definitions:

Offensive Contact

In tort law, an act that would offend a reasonable person's personal dignity or integrity without their consent.

Transferred Intent

A legal principle allowing the intent to harm one individual to be transferred to another individual who was actually harmed.

Battery

An intentional act that causes harmful or offensive contact with another person's body.

Rock

A naturally occurring solid aggregate of one or more minerals or mineraloids found in the Earth's crust.