Suppose That an Economy Wants to Eliminate the Resource Waste

question 53

Multiple Choice

Suppose that an economy wants to eliminate the resource waste associated with excess capacity in monopolistically competitive markets.Which of the following would achieve this goal?

• A)Firms are allowed to establish significant barriers to entry.
• B)Firms are encouraged to produce less output.
• C)Firms are required to set price equal to marginal cost.
• D)Firms are required to charge the same price.

---

Definitions:

Recognition Principles

The criteria and rules that govern when and how revenue and expenses are recognized in the accounting period they occur.

Expenses

Costs incurred by a business in the process of earning revenues, including operational costs, rent, utilities, and employee salaries.

Comprehensive Business Reporting

A holistic approach to reporting that combines financial, social, and environmental performance indicators to give stakeholders a more complete view of a company's activities and impact.

CFA

Chartered Financial Analyst, a professional designation given by the CFA Institute to finance and investment professionals.