Week 5 Quiz Microeconomics 1. ; Many public goods are provided more or less free at the point of use and then paid for out of general taxation or another general form of charge such as a licence fee. Thus, merchandise inventory should be reported on the balance sheet at its recorded cost of $400. Economists generally lump together the quantities suppliers are willing to produce at each price into an equation called the supply curve. D)has a close substitute. The long-term result of entry and exit in a perfectly competitive market is that all firms end up selling at the price level determined by the lowest point on the average cost curve. Make any adjusting entry … Explain whether the market produces too little, too much, or the right amount: (a) of goods with detrimental externalities; (b) of goods with public good characteristics. ACCOUNTING - Tenth Edition Solutions Manual Chapter 6: Merchandise Inventory Page 18 of 176 S6-8 Solution: No adjusting entry is needed because the current replacement cost (market value) is higher than the recorded cost of ending merchandise inventory. As a result, today’s CEOs are well versed in inventory strategies such as Just-in-time (JIT), collaborative planning, forecasting and replenishment, and shared point of sale … The concept of externality was first developed by economist Arthur Pigou in the 1920s. Government can correct these market failures. If prices fall, suppliers who are unable to cover their costs will drop out. In economics, an externality is a cost or benefit that is imposed on a third party who did not agree to incur that cost or benefit. This type of market does not produce enough output Correct Answer produces too much output charges a price that is too high You Answered none of these are true When there is a negative production externality in a market, too much output is produced. A variety of approaches can be used to address the ... make certain that just the right amounts of public goods are provided b. persuade government to act on its behalf ... ton of steel. In classical economics, Say's law, or the law of markets, is the claim that the production of a product creates demand for another product by providing something of value which can be exchanged for that other product.So, production is the source of demand. Question 2 0 / 1 pts Consider a market with a negative production externality. Market failure, failure of a market to deliver an optimal result. C)is in a market with legal barriers to entry. The higher the price, the more suppliers are likely to produce. In his principal work, A Treatise on Political Economy (Traité d'économie politique, 1803), Jean-Baptiste Say wrote: "A … A)The market demand and the firm's demand are the same for a monopoly. Supply will increase until a market-clearing price is reached again. 19)Which of the following statements is correct? ; State provision may help to prevent the under-provision and under … Air pollution from motor vehicles is an example of a negative externality. This outcome is why perfect competition displays productive efficiency: goods are being produced at the lowest possible average cost. Having the right amount of inventory when and where it’s needed is a key element of corporate success.. After all, losing control of inventory eats away at corporate profit margins and costs a firm its customers. 18)Firms face competition when the good they produce A)is in a market with natural barriers to entry. The non-rival nature of consumption provides a strong case for the government rather than the market to provide and pay for public goods. Under the Market Welfare Model, the economy will produce exactly the correct amount of goods due to the three premises of the model: the demand curve for a good or service illustrates its benefits to society, the supply curve for this good or service portrays its cost to society, and a single market equilibrium is the intersection of these two … B)is unique. Before the tax, 80 tons of steel would be produced and sold for $10 per ton. In particular, the economic theory of market failure seeks to account for inefficient outcomes in markets that otherwise conform to the assumptions about markets held by neoclassical economics (i.e., markets that feature perfect competition, symmetrical information, and completeness). 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