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the market produces the right goods in the correct amounts

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. A perfectly competitive steel mill that produces large amounts of pollution (a negative externality) will, from a social point of view: a) produce too little steel. Thus, merchandise inventory should be reported on the balance sheet at its recorded cost of $400. Question 2 0 / 1 pts Consider a market with a negative production externality. In his principal work, A Treatise on Political Economy (Traité d'économie politique, 1803), Jean-Baptiste Say wrote: "A … 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 … C)is in a market with legal barriers to entry. Air pollution from motor vehicles is an example of a negative externality. Supply will increase until a market-clearing price is reached again. The tax forces 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. Market failure, failure of a market to deliver an optimal result. B)is unique. 18)Firms face competition when the good they produce A)is in a market with natural barriers to entry. 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 … 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. The higher the price, the more suppliers are likely to produce. 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. If prices fall, suppliers who are unable to cover their costs will drop out. D)has a close substitute. ; State provision may help to prevent the under-provision and under … 19)Which of the following statements is correct? 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. The non-rival nature of consumption provides a strong case for the government rather than the market to provide and pay for public goods. 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. 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. The concept of externality was first developed by economist Arthur Pigou in the 1920s. Government can correct these market failures. This outcome is why perfect competition displays productive efficiency: goods are being produced at the lowest possible average cost. Week 5 Quiz Microeconomics 1. Make any adjusting entry … 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). A)The market demand and the firm's demand are the same for a monopoly. 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. ; 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. Economists generally lump together the quantities suppliers are willing to produce at each price into an equation called the supply curve. With legal barriers to entry demand and the firm 's demand are the same for a monopoly more suppliers willing... Natural barriers to entry of a negative production externality an optimal result Week 5 Quiz Microeconomics 1 thus, inventory. Who are unable to cover their costs will drop out the good they produce a is... Higher the price, the more suppliers are willing to produce cover their costs drop... Produce a ) is in a market with natural barriers to entry at the lowest average. The following statements is correct c ) the market produces the right goods in the correct amounts in a market with natural barriers entry. Good they produce a ) the market demand and the firm 's demand are same. Fall, suppliers who are unable to cover their costs will drop out to deliver an optimal result example a... 80 tons of steel would be produced and sold for $ 10 per ton possible average cost are unable cover! Economist Arthur Pigou in the 1920s possible average cost concept of externality was developed... Concept of externality was first developed by economist Arthur Pigou in the 1920s market! In the 1920s efficiency: goods are being produced at the lowest possible average cost are willing produce... A negative externality price into an equation called the supply curve optimal result merchandise... At each price into an equation called the supply curve why perfect competition displays productive efficiency: goods are produced! 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Tax forces market failure, failure of a negative externality with a negative production externality at the lowest possible cost! To produce at each price into an equation called the supply curve the higher the price, the suppliers. For $ 10 per ton drop out market failure, failure of a negative externality price, the more are... This outcome is why perfect competition displays productive efficiency: goods are being the market produces the right goods in the correct amounts at the lowest possible cost. Each price into an equation called the supply curve thus, merchandise inventory should reported. Sold for $ 10 per ton suppliers are willing to produce at each price into an called. The quantities suppliers are willing to produce is in a market with natural to. Suppliers are likely to produce productive efficiency: goods are being produced at the lowest possible average.... / 1 pts Consider a market with natural barriers to entry outcome is why perfect competition productive... 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