What Do the Decisions of Buyers and Sellers That Affect

question 8

Multiple Choice

What do the decisions of buyers and sellers that affect people who are not participants in the market create

• A)market power
• B)externalities
• C)profiteering
• D)a black market

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Definitions:

Agency Cost

The costs arising from conflict of interest between principals (owners) and agents (managers), including monitoring expenditures and the costs of structuring operations to minimize issues.

Marginal Cost

The cost incurred by producing one additional unit of a product or service.

Claim Dilution

The reduction in the likelihood of recovery or the value of each creditor’s claim as a result of an increase in the number of claimants or claims against the same debtor or asset.

Secured Loan

A loan that is backed by collateral, providing the lender with assurance that the loan will be repaid.