Which of the Following Does Not Apply to Secondary Markets

question 59

Multiple Choice

Which of the following does not apply to secondary markets?

• A) Transactions are important to the efficient allocation of resources in our economy.
• B) New resources are provided when shares of stock are sold by the corporation to the initial owners.
• C) Transactions help to establish market prices for additional shares that may be issued in the future.
• D) Many investors might be unwilling to provide resources to corporations if there is no available mechanism for the future sale of their stocks and bonds to others.

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Definitions:

Productive Efficiency

Refers to a situation where an economy or entity cannot produce more of one good without affecting the production of another good, operating at the lowest possible cost per unit.

Allocative Efficiency

A state of resource allocation where goods and services are distributed according to consumer preferences, maximizing overall social welfare.

Economically Inefficient

A condition where resources are not utilized in the best possible manner, leading to potential waste or losses in terms of welfare or output.

Average Total Cost

The total cost of production divided by the total quantity produced, representing the per-unit cost of production.