Which of the Following Statements Is Correct

question 35

Multiple Choice

Which of the following statements is correct?

• A) There is a trade-off between product variety and allocative efficiency.
• B) Product variety and allocative efficiency are complementary; increasing one enhances the other.
• C) There is no relationship between product variation and allocative efficiency.
• D) Greater excess capacity reduces firms’ ability to differentiate products.

---

Definitions:

Freeze-Out Acquisition

A strategy used in mergers and acquisitions where a majority shareholder forces out minority holders to take full control of the company.

Share Split

Traditionally, a corporation’s dividing existing shares into two or more shares, thereby increasing the number of authorized, issued, and outstanding shares and reducing their par value. In modern corporation law, treated like a share dividend. Also called stock split.

Total Fairness Test

A legal standard used to evaluate the overall fairness and equity of a corporate action or decision, especially in mergers and acquisitions.

Straight Voting

A form of voting for directors that ordinarily permits a shareholder to cast a number of votes equal to the number of shares he or she owns for as many nominees as there are directors to be elected. See also cumulative voting.