Market Failure Can Occur When

question 17

Multiple Choice

Market failure can occur when

• A)individuals can influence prices.
• B)a market for a commodity does not exist.
• C)some firms have market power.
• D)all of these answers are correct.

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Definitions:

Scrap Value

The estimated resale value of an asset at the end of its useful life, often considered in depreciation calculations.

Salvage Value

The expected market value an asset will achieve when it is disposed of after its life cycle.

Payback Period

The length of time it takes for an investment to recover its initial cost out of the cash inflows that it generates.

Simple Rate of Return

A method of investment appraisal that calculates the annual incremental net operating income as a percentage of the initial investment.