In a Collusive Oligopoly, Joint Profits Are Maximized When a Price

question 163

Multiple Choice

In a collusive oligopoly, joint profits are maximized when a price leader establishes price based on:

• A)its own demand and cost schedules.
• B)the market demand for the product and the marginal costs of the various firms.
• C)the market demand for the product and its own marginal cost schedule.
• D)the demand curve faced by a typical competitor and its own marginal cost curve.
• E)its own demand and the marginal costs of the various firms.

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Definitions:

Goodwill

An intangible asset representing the excess of purchase price over the fair market value of identifiable assets and liabilities in a business acquisition.

Fair Value

The amount one would get from selling an asset or would need to spend to settle a liability in a well-organized sale involving market players on the date of evaluation.

Tax Rate

The fraction of earnings on which the government imposes taxes for individuals or corporations.

Consolidation Worksheet Entry

An accounting entry used in the preparation of consolidated financial statements which adjusts for intercompany transactions and balances.