When the Free Market Produces Less Than the Socially Optimal

question 181

Multiple Choice

When the free market produces less than the socially optimal quantity of a good,

• A)negative externalities must be present
• B)marginal social cost must exceed marginal private cost
• C)marginal private benefit must exceed marginal social benefit
• D)the government should tax production of the good
• E)there has been a market failure

Understand the concept of continuous random variables and their probability measures.

Calculate probabilities involving the standard normal distribution (z-scores).

Identify and compute areas under the normal probability distribution.

Distinguish between true and false statements regarding characteristics of normal distributions.

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Definitions:

Days' Sales In Inventory

Days' Sales in Inventory is a financial ratio that indicates the average time in days that a company takes to turn its inventory into sales.

Sales On Account

Transactions where goods or services are sold and payment is to be made at a later date, often recorded as accounts receivable.

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including the cost of materials and labor.

Accounts Receivable Turnover

A financial ratio that measures how effectively a company collects on its credit sales by comparing net credit sales with the average accounts receivable.