Market Failure Occurs When

question 59

Multiple Choice

Market failure occurs when

• A) a good is too expensive for the market to provide.
• B) an unrestrained market economy leads to too few or too many resources going to a specific economic activity.
• C) one good is superior to another and drives it out of the market.
• D) the stock market experiences a very large loss.

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Definitions:

Annual Net Income

The total profit of a company after subtracting all expenses from revenue for one year.

Net Present Value Method

A financial analysis technique that discounts future cash flows to present value to assess the profitability of an investment or project.

Economic Life

This term refers to the expected period during which an asset remains useful to the owner or is expected to generate economic benefits.

Initial Investment

Initial investment refers to the initial amount of money spent or committed to start a business venture, purchase capital assets, or invest in a project.