If an Externality Is Present in a Market, Economic Efficiency

question 6

Multiple Choice

If an externality is present in a market, economic efficiency may be enhanced by

• A)government intervention.
• B)a decrease in foreign competition.
• C)fewer market participants.
• D)weaker property rights.

---

Definitions:

Investing Activities

Transactions involving the purchase and sale of long-term assets and investment securities, reflected in a company's cash flow statement.

Direct Method

A cost allocation approach directly assigning service department costs to producing departments without any intermediate steps.

Sales Adjusted

The revision of sales figures to account for returns, allowances for damaged goods, and discounts given.

Cash Basis

An accounting method where transactions are recorded when cash is received or paid, without regard to when the transactions occurred.