Which of the Following Is the Major Reason Why Most

question 85

Multiple Choice

Which of the following is the major reason why most economists are reluctant to charge price searcher markets with allocative inefficiency?

• A) Consumers value the wider variety of quality and styles in competitive price-searcher markets.
• B) Advertising costs are typically so small that they are irrelevant.
• C) Competitive price searchers always operate that the lowest point on their average total cost curve.
• D) Competitive price searchers charge a price equal to marginal cost.

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Definitions:

Market Price

The current price at which an asset or service can be bought or sold in a open and competitive market.

Convertible Bonds

Convertible bonds are fixed-income debt securities that can be converted into a predetermined number of the issuer's equity shares at certain times during their life, usually at the discretion of the bondholder.

Diluted Earnings Per Share

A financial metric that calculates the quality of a company's earnings per share if all convertible securities were exercised.

Stock Dividend

A stock dividend is a distribution of additional shares to shareholders, proportionate to their existing holdings, instead of cash.