If the Demand Curve Fails to Capture All of the Benefits

question 101

Multiple Choice

If the demand curve fails to capture all of the benefits of consumption,then the:

• A)equilibrium price is efficient but the quantity will be too large.
• B)the equilibrium price is inefficiently low.
• C)government needs to impose regulations that require more consumption.
• D)the equilibrium price is inefficiently high.

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Definitions:

Inventory

Items held for sale in the ordinary course of business, as well as materials and components that will be used in the production of goods to be sold.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value over time.

Accounts Payable

Liabilities or amounts owed by a company to its creditors for goods or services that have been delivered but not yet paid for.

Depreciation Expense

The portion of the cost of a fixed asset that is considered consumed during a specific accounting period, used to reflect wear and tear.