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Listen and Hear Are Thinking of Dissolving Their Partnership

question 56

Essay

Listen and Hear are thinking of dissolving their partnership.Listen has a friend who told him to complete a "lump-sum" liquidation.Hear wants to complete an "installment" liquidation.They have come to you for advice.What do you recommend and Why?


Definitions:

Negative Externalities

Costs suffered by a third party as a result of an economic transaction, such as pollution caused by industry, which are not reflected in the market prices.

Positive Externalities

Benefits that result from a transaction or activity and affect others not directly involved in the transaction or activity.

Marginal Social Cost

The total cost society bears for the production of an additional unit of a product, including both private and external costs.

Marginal Private Cost

The additional cost borne by a producer for producing one extra unit of a good or service.

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