An Externality Is an Example of a Market Failure

question 227

True/False

An externality is an example of a market failure.

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Definitions:

Investing Activities

Refers to the spending of capital on assets with the expectation of generating future returns, such as purchasing property, equipment, or other companies.

Accounts Receivable

Money owed to a company by its customers for goods or services delivered but not yet paid for.

Indirect Method

A cash flow statement reporting approach that starts with net income then adjusts for non-cash transactions and changes in working capital to calculate cash flow from operating activities.

Operating Activities

Business actions directly related to the production and delivery of goods and services.