Markets Tend to Overallocate Resources to the Production of a Good

question 79

Multiple Choice

Markets tend to overallocate resources to the production of a good when

• A) there are negative externalities.
• B) there are positive externalities.
• C) there are public goods produced.
• D) equilibrium occurs.

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Definitions:

Periodic Inventory System

An inventory accounting system where updates are made on a periodic basis, such as monthly or yearly, rather than continuously.

Average-Cost Method

An inventory valuation method that calculates stock value based on the average cost of goods available for sale during the period.

Ending Inventory

Refers to the total value of goods available for sale at the end of an accounting period, not yet sold.

Lower-of-Cost

A principle requiring that inventory is recorded at the lower cost between its original purchase price and its current market price.