Which Principle Underlies the Interaction of Individual Choices

question 44

Multiple Choice

Which principle underlies the interaction of individual choices?

• A)Choices are necessary because resources are scarce.
• B)There are gains from trade.
• C)"How Much" is a decision at the margin
• D)People usually respond to incentives,exploiting opportunities to make themselves better off.

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Definitions:

Diminishing Returns

A principle stating that if one factor of production is increased while others are held constant, the output per unit of the variable factor will eventually decrease.

AVC

Average variable cost, which is the total variable cost divided by the quantity of output produced.

ATC

Stands for Average Total Cost, which is the total cost per unit of output produced.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance, remaining constant regardless of the business activity.