If a Person Takes a Costly Action Simply to Influence

question 8

Multiple Choice

If a person takes a costly action simply to influence others' beliefs then this person is engaged in what economists call:

• A) market unraveling.
• B) adverse selection.
• C) moral hazard.
• D) signaling.

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Definitions:

Accounts Payable

The amounts owed by a company to suppliers or creditors for goods and services received but not yet paid for.

Inventories

Inventories consist of raw materials, work-in-progress, and finished goods held by a company during the production and sales process, awaiting sale.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including the cost of the materials and labor directly involved in creating the product.

Cash Dividends

Payments made by a corporation to its shareholder members out of its earnings. It represents a share of corporate profits.