The Existence of Spillover Effects Weakens the Efficiency with Which

question 29

Multiple Choice

The existence of spillover effects weakens the efficiency with which the market system functions because they:

• A)are a major source of inflation
• B)mean that certain essential goods and services do not get produced at all
• C)are a major source of employment
• D)cause certain goods to be overproduced or underproduced
• E)can cause deflation

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Definitions:

Book Value

The difference between the cost of a depreciable asset and its related accumulated depreciation.

Opportunity Cost

The potential benefit that may be obtained from following an alternative course of action.

Nonfinancial Information

Information that is not monetary in nature, such as customer satisfaction, employee turnover, and operational efficiency, used in decision making.

Unprofitable Segment

A division or branch of a company that does not generate profit and may cause a financial drain on the business.