Exhibit 17-4 -Which of the Following Could Not Have Caused the Increase

question 14

Multiple Choice

Exhibit 17-4

-Which of the following could not have caused the increase in demand indicated in Exhibit 17-4?

• A)new firms located on the river
• B)the pollution was discovered to be more hazardous than had previously been supposed
• C)the cost of pollution abatement equipment rose
• D)consumers wanted to buy more of the good produced by the polluters
• E)the government subsidized firms so they could better afford to buy pollution rights

---

Definitions:

Acquisition Differential

The gap between what is paid to buy a company and the net worth of its recognizable assets and debts.

Equity Method

A financial recording method for logging investments in subsidiary entities where the investor has considerable sway but lacks complete dominance.

Goodwill

An intangible asset that arises when a company acquires another business for a price higher than the fair value of its identifiable net assets.

Equity Method

An accounting technique used when an investor holds significant influence but not full control over an investee, allowing the investor to record a proportionate share of the investee's profits or losses.