Market Failure Occurs When

question 64

Multiple Choice

Market failure occurs when

• A) firms that are incurring losses leave a market.
• B) perfectly competitive firms produce where MR = MC.
• C) resources are misallocated, or allocated inefficiently.
• D) firms are only able to earn a normal profit.

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Definitions:

Dividends Payable

A liability recorded on the company's balance sheet for dividends that have been declared by the board of directors but have not yet been paid to shareholders.

Operating Activities

Transactions and events that relate to the primary operations of the company, such as sales and services.

Acquisition Of Equipment

The process of obtaining capital or operational assets, like machinery or tools, necessary for conducting business.

Investing Activities

Purchases or sales of assets, loans made to suppliers or received from customers, or any changes in cash from investing in the financial markets.