A Competitive Market May Misallocate Resources Over Time Because

question 23

Multiple Choice

A competitive market may misallocate resources over time because

• A)current profits are worth more than future profits because of the time value of money.
• B)current profits are worth less than future profits because of the time value of money.
• C)the Federal Reserve sets interest rates different than the opportunity cost of consuming now versus later.
• D)the Federal Reserve always prefers capital investment over personal consumption.

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Definitions:

Gross Profit

The difference between sales revenue and the cost of goods sold, indicating the financial health of a company's core activities.

List Price

The published price of a product or service, often suggested by the manufacturer or service provider, before any discounts or negotiations.

Standard Amount

A pre-determined or fixed quantity used as a benchmark, reference, or norm for measurements, production, or financial assessments.

Net Worth

The total value of an individual's or entity's assets minus their liabilities; a measure of financial health.