When the Net Benefits of All Economic Activities Are Maximized

question 196

Multiple Choice

When the net benefits of all economic activities are maximized, economists say the allocation of resources is _______ .

• A) inefficient
• B) correct
• C) efficient
• D) well done

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Definitions:

Equity

Equity represents the value that would be returned to a company’s shareholders if all the assets were liquidated and all the debts repaid.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or a business's operating cycle, whichever is longer.

Uncollectible Accounts

Accounts receivable that are considered unlikely to be collected and are therefore written off as a loss.

Direct Write-off Method

A method used in accounting to write off bad debts when they are determined to be uncollectible, impacting accounts receivable and expense accounts directly.