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:

Functional Currency

This represents the primary currency of the economic environment in which a business operates, determining the currency in which its financial statements are presented.

Ending Inventory

The total value of all the goods available for sale at the end of an accounting period, calculated before the start of the next period.

Exchange Rates

The valuation at which one nation's currency can be swapped for another's, pivotal in global finance and affecting import-export pricing.

Acquisition Differential

Represents the excess amount over the fair market value of net assets that is paid by a company to acquire another company.