Identify the Truthfulness of the Following Statements

question 43

Multiple Choice

Identify the truthfulness of the following statements.
I. In perfectly competitive markets there are no externalities. That is, actions of decision-makers on each others' well being do not extend beyond those effects transmitted by prices.
II. Partial equilibrium analysis determines equilibrium in a single market, taking the prices and outputs of other markets as fixed.

• A) Both I and II are true.
• B) Both I and II are false.
• C) I is true; II is false.
• D) I is false; II is true.

---

Definitions:

Sales Budget

A sales budget estimates the amount of revenue a company expects to earn from sales over a specific period, serving as a planning and control tool for managing operations.

Direct Labor Cost

The total cost of workforce directly involved in the manufacturing of a product, including wages and salaries.

Budgeted Balance Sheet

A financial statement that projects the financial position of a company at a future date, including assets, liabilities, and equity.

Pro Forma

Financial statements or projections based on hypothetical scenarios or assumptions to forecast future financial performance.