In a competitive market, what does it mean when a company goes out of business?
A) Capitalism capriciously causes some businesses to fail.
B) The economy is not working very well.
C) It is not a very useful signal.
D) Resources are freed up to go to some other higher-valued use.

Question

Quizplus · Accepted Answer

When a company goes out of business in a competitive market, it means that resources are freed up and can be used for a higher-valued purpose. The market has deemed the company's product or service as less valuable than its competitors, causing it to fail. This is a natural part of a competitive market economy and allows for resources to be used in a more efficient manner. Therefore, option D is the best choice. Option A is incorrect because capitalism does not cause businesses to fail capriciously, but rather as a result of market competition. Option B is also incorrect because a single business closure does not indicate the health of the overall economy. Option C is incorrect because it is a useful signal for investors and other businesses to learn from.

In a Competitive Market, What Does It Mean When a Company