ABC Inc Purchased Shares of DEF Inc as Follows

question 57

Multiple Choice

ABC Inc purchased shares of DEF Inc as follows:

June 30^th, 2013 4,000 shares @ $3 per share $12,000
June 30^th, 2014 3,000 shares @ $4 per share $12,000
June 30^th, 2015 3,000 shares @ $6 per share $18,000

The shares are considered to be passive investments. ABC Inc. has a December 31^st, year-end.
The market value of the DEF shares at each year-end was as follows:
December 31^st, 2013 $3.50 per share
December 31^st, 2014 $5.00 per share
December 31^st, 2015 $5.50 per share
On July 1^st, 2015, ABC sold half its shares in DEF Inc. for $6.50 per share.

-The balance in the Investment in DEF account immediately following the sale of the shares was:

• A) $58,000.
• B) $26,500.
• C) $53,000.
• D) $55,000.

Comprehend the dominant firm model and the behavior of fringe firms in such markets.

Recognize the application of the Prisoners' Dilemma in describing oligopolistic market outcomes.

Identify different market structures, including the dominant firm model and the kinked demand curve model.

Calculate profit maximizing price and output levels under various cost and demand scenarios.

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Definitions:

Profit-Maximizing Output

The level of production at which a company achieves the highest possible profit margin, given its costs and market demand.

Wage Rate

The amount of money paid to an employee per unit of time, which can be hourly, daily, or annually.

Total Product

The overall amount of products made by a company within a specific timeframe.

Marginal Product

The additional output produced by using one more unit of a variable input, holding other inputs constant.