Market Failures Occur When

question 74

Multiple Choice

Market failures occur when

• A) externalities exist.
• B) economic efficiency increases.
• C) there is an increase in demand.
• D) there is a change in quantity demanded.

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Definitions:

Reciprocal Services Method

A method of allocating service department costs to producing departments by considering the interdepartmental exchanges of services.

Support Department Costs

The costs associated with functions that assist the direct production or service departments of an organization, such as maintenance and administration.

Overhead Rates

The ratio used to allocate indirect costs to products or services, typically based on a measure such as labor hours or machine hours.

Personnel Costs

Expenses related to the compensation and benefits of employees, including wages, salaries, bonuses, and fringe benefits.