Compared to Ideal Economic Efficiency, When the Production of a Good

question 148

Multiple Choice

Compared to ideal economic efficiency, when the production of a good generates external benefits, competitive markets will likely result in an output that is too

• A) large and a price that is too high.
• B) large and a price that is too low.
• C) small and a price that is too high.
• D) small and a price that is too low.

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Definitions:

Common Stock Optionwarrants

Equity derivatives that give the holder the right to purchase common stock at a specified price within a certain time period.

Unrealized Increase

The potential gain in the value of an investment that has not yet been sold and thus not yet converted into actual profit.

Donated Capital

Assets and resources given to a company without the expectation of return or compensation, often used to fund operations or expand business activities.

Contra Account

An account used in a general ledger to reduce the value of a related account when the two are netted together.