"Government Failure" Is Present When

question 71

Multiple Choice

"Government failure" is present when

• A) constitutional restrictions block government action that is favored by the majority of voters.
• B) political decision-makers try to serve the general public rather than their personal interest.
• C) the structure of incentives encourages political decision-makers to undertake actions that conflict with the efficient allocation of resources.
• D) the political decision-makers are motivated by something other than good intentions; if they have good intentions, political action will allocate resources efficiently.

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Definitions:

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing ownership interest.

Common Stock Option Warrants

Rights issued to investors to purchase common stock at a specified price within a predefined time frame, potentially diluting existing shareholders.

Treasury Stock

Shares that were issued and later reacquired by the corporation, reducing the amount of outstanding stock on the open market.

Voting Rights

The entitlement of shareholders to vote on company matters, typically exercised at annual meetings or special resolutions, often proportional to the number of shares held.