The Problem of Determining What Goods and Services Society Should

question 36

Multiple Choice

The problem of determining what goods and services society should produce exists because:

• A) resources are plentiful.
• B) resources are scarce.
• C) most of our resources are privately rather than socially owned.
• D) most of our resources are socially rather than privately owned.

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Definitions:

Long-Run Equilibrium

A state in which all inputs can be adjusted by firms, market supply equals demand, and there is no incentive for economic actors to alter their behavior.

Excess Capacity

The condition where a business produces less than the maximum amount possible, often leading to inefficiency.

Average Total Cost

The total cost of production divided by the quantity produced, taking into account both fixed and variable costs.

Excess Capacity

The situation where a company is producing less than its full potential output due to lack of demand or other constraints.