-What Would Happen in a Free Market System When Production

question 105

Multiple Choice

-What would happen in a free market system when production of a good generates negative externalities?

• A) There is a shortage of the good.
• B) There is a surplus of the good.
• C) The equilibrium quantity of the good is less than the efficient amount.
• D) The equilibrium quantity of the good is more than the efficient amount.

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Definitions:

Fair Value

The capital retrieved from trading an asset or the expenditure for reallocating a liability in a well-arranged market transaction at the point of assessing value.

Carry Value

The original purchase cost of an asset adjusted for depreciation, amortization, or impairment costs on the financial statements.

Joint Operation

A business arrangement where two or more parties share control and management of a project or business.

Joint Venture

A business arrangement where two or more parties agree to pool their resources for the purpose of accomplishing a specific task or business activity.