A Free Market Fails When

question 130

Multiple Choice

A free market fails when

• A)there is government intervention.
• B)there is an external effect in either production, consumption, or both.
• C)firms that produce goods which create positive externalities go bankrupt.
• D)firms that produce goods which create negative externalities earn high profits.

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Definitions:

Unit Selling Price

The price at which a single unit of a product is sold to customers.

Sales

The total amount of goods or services sold by a company, serving as a major component of its revenue.

Cost-volume-profit Analysis

A method used to determine how changes in costs and volume affect a company's operating income and net income.

Service Companies

Businesses that provide intangible products or services to consumers or other businesses rather than manufacturing goods.