When firms go bankrupt, the bankruptcy:
A) indicates that capitalism is inefficient.
B) frees up resources to go to higher-valued uses.
C) reveals a faulty price system.
D) usually results from other firms practicing predatory pricing.

Question

Quizplus · Accepted Answer

When a firm goes bankrupt, its assets are sold off and resources are freed up to be used in other, potentially more productive ways. This allows for a reallocation of resources based on market demand, which can improve overall efficiency in the economy. While bankruptcy may be a result of various factors, such as poor management or external economic conditions, it does not necessarily indicate that capitalism or the price system is inherently faulty or inefficient.

When Firms Go Bankrupt, the Bankruptcy