A Market Failure Arises When an Entire Sector of the Economy

question 128

True/False

A market failure arises when an entire sector of the economy (for example, the airline industry)collapses because of some unforeseen event.

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Definitions:

Common Stock Offering

The process by which a corporation issues new shares of common stock to the public.

Dividend Tax Credit

Tax formula that reduces the effective tax rate on dividends.

Canadian Corporations

Companies incorporated under the laws of Canada, subject to Canadian corporate regulations and taxation.

Cash Flow To Creditors

A firm’s interest payments to creditors less net new borrowings.