Which of the Following Could Be Evidence of a Market

question 179

Multiple Choice

Which of the following could be evidence of a market failure?

• A) Resources in an economy are not fully utilised.
• B) The market price of a product is above the average cost of production.
• C) There is only a handful of firms competing against each other in an industry.
• D) Market prices do not reflect true production costs.

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Definitions:

Accounting System

A structured process of collecting, recording, summarizing, and interpreting financial information of a business.

Adjusting Entries

At the close of a financial period, journal entries are created to distribute earnings and costs to the period in which they genuinely took place.

Adjusted Trial Balance

is a listing of all company accounts that will appear on the financial statements after making end-of-period adjustments.

Reversing Entry

An accounting entry made at the beginning of an accounting period to reverse or cancel out a previous adjusting entry.