When the Price System Fails to Generate an Efficient Allocation

question 144

Multiple Choice

When the price system fails to generate an efficient allocation of resources

• A) the market will always correct it.
• B) consumers will spend less.
• C) business will produce more.
• D) too few or too many goods will be produced.

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Definitions:

Straight-Line Method

A depreciation method that allocates the cost of an asset evenly over its useful life.

Incremental Net Operating Income

The difference in net operating income between two alternatives.

Depreciated

Refers to the decrease in the value of an asset over time due to wear and tear or obsolescence.

Sales Revenues

The total amount of money generated from the sale of goods or services before any costs or expenses are deducted.