Article Summary Despite a Shaky Start, Online Used Car Seller Carvana Sold

question 36

Multiple Choice

Article Summary
Despite a shaky start, online used car seller Carvana sold all 15 million stock shares in its IPO and raised about $225 million. Initially priced at $15 per share, the stock closed at $11.10 per share at the end of the first trading day. The Phoenix-based company, known for its automated car vending machines, offers free next-day delivery to residents in 24 markets across the United States. Carvana, founded in 2012, has seen large revenue growth but has never reported a profit., losing about $93 million in 2016. The company also said in its S-1 IPO filing that it expects losses to continue in the near future.
Source: Kirsten Korosec, "Used Car Vending Machine IPO Sputters In First Day of Trading," Fortune, April 28, 2017.
-When Carvana sold stock to the public in its IPO, it did so through the New York Stock Exchange.This is an example of Carvana raising funds through

• A)reinvesting retained earnings.
• B)a financial intermediary.
• C)dividend reinvestment.
• D)a financial market.

Evaluate the consequences of government policies on market equilibrium, prices, and output levels.

Identify the differences between private, social, and marginal costs and benefits.

Appreciate the significance of negotiating solutions in externalities and the Coase theorem.

Understand how external benefits justify government funding in education and other areas.

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Definitions:

Materials Costs

The direct costs associated with the raw materials used in the production of goods.

Beginning Work in Process

The value of goods that are in the production process at the start of an accounting period.

Ending Work in Process

The inventory that is still in the production process at the end of an accounting period, not yet ready for sale.

Total Units

The complete count of individual items or goods that are present in a given context or produced by a process.