When a Business Brings in Less Money Than It Needs

question 2

Multiple Choice

When a business brings in less money than it needs to cover expenses, it incurs a _________.

• A)deferral
• B)loss
• C)depreciation
• D)tax cut

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Definitions:

Government Failure

Occurs when government intervention in the economy causes inefficiencies or leads to an allocation of resources that does not maximize societal welfare.

Market Failure

A situation in which the allocation of goods and services by a free market is not efficient, often leading to a net social welfare loss.

Externality

A consequence of an economic activity experienced by unrelated third parties; can be either positive or negative.

Resource Dependency

A theory in organizational studies that describes how external resources dictate the behaviors and strategies of organizations.