When an Economy Operates Efficiently

question 88

Multiple Choice

When an economy operates efficiently,

• A)the MRPs of every input into the production of a good are equal.
• B)marginal utility equals marginal cost for every good.
• C)the price of a good equals the sum of the marginal physical products of its inputs.
• D)All of the above are correct.

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Definitions:

Cash Flow

The complete volume of cash flowing into and exiting a corporation, with a significant impact on its liquidity.

Operating Activities

Day-to-day business functions involved in running a company, typically reflected in the cash flow statement.

Dividends

Payments made by a corporation to its shareholder members, typically from profits or reserves.

Net Profit Margin

A financial metric that measures how much of every dollar of revenues is translated into profits, after all expenses are deducted.