Which of the Following Statements Is True

question 44

Multiple Choice

Which of the following statements is true?

• A) Production in a perfectly competitive market is efficient because resources in the market leave those sectors in which price cannot cover their costs of production and enter those sectors in which price can cover their costs of production.
• B) Production in a perfectly competitive market is suboptimal because the absence of free entry and exit of firms allows firms to specialize in only one particular industry.
• C) Production in a perfectly competitive market is Pareto inefficient because the government or a central planner carefully analyzes the needs and requirements of society and instructs firms on what to produce and in what quantity.
• D) Production in a perfectly competitive market is Pareto efficient because the government or a central planner carefully analyzes the needs and requirements of society and instructs firms on what to produce and in what quantity.

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Definitions:

UCC

The Uniform Commercial Code (UCC) is a comprehensive set of laws governing commercial transactions in the United States, including sales, leases, negotiable instruments, and secured transactions.

Net After-Tax Salvage Value

The estimated resale value of an asset at the end of its useful life, minus any removal or disposal costs, and adjusted for taxes.

Recapture

A tax provision where previously deducted or credited amounts are added back to income.

Tax Rate

The share of income that is required to be paid to the government by an individual or corporation as tax.