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Related to the Economics in Practice on P

question 15

Multiple Choice

Related to the Economics in Practice on p. 473: If a recovery from a recession is slower than expected, companies like General Motors would likely experience ________ in unplanned inventories and as a result ________ production.


Definitions:

Short Run

A time period in which at least one input, like plant size, is fixed and cannot be changed by the firm.

Price Taker

A market participant that accepts the prevailing market price and does not have the power to influence it.

Perfectly Competitive

A market structure characterized by a complete absence of rivalry among the individual firms.

Price Takers

Firms or individuals who accept the market price as given and have no influence to change it due to their small market share.

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