Consolidation Might Not Be Appropriate Even When the Majority Owner

question 16

Multiple Choice

Consolidation might not be appropriate even when the majority owner has control if:

• A)​The subsidiary is in bankruptcy.
• B)​A manufacturing-based parent has a subsidiary involved in banking activities.
• C)​The subsidiary is located in a foreign country.
• D)​The subsidiary has a different fiscal-year end than the parent.

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Definitions:

Marginal Utility

The supplementary enjoyment or advantage gained by a customer from the consumption of one more unit of a good or service.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service relative to its market price, indicating the economic benefit to consumers.

High Price

Refers to goods or services being sold at a rate above the average market value, often due to high demand, low supply, or premium quality.

Marginal Utility

Marginal utility represents the additional satisfaction or benefit a consumer gains from consuming one more unit of a good or service.