The Price of a Good or a Service Can Be

question 29

Multiple Choice

The price of a good or a service can be determined by free interaction of demand and supply or by a government price regulation.One important difference between these two price- determining methods is

• A)one is capitalist and the other is communist.
• B)there are no shortages or surpluses at the free- market equilibrium price.
• C)the government is in the best position to know the needs of the people.
• D)that a regulated price above the equilibrium price will always result in shortages.
• E)regulated prices are fairer since more people can then afford the goods or services.

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Definitions:

Scale

The size, extent, or level of something, typically used in the context of production or operations to indicate magnitude or capacity.

Returns to Scale

A concept in economics that describes how the output of a firm changes as all its inputs are increased proportionally.

Short Run

A period in economics during which at least one factor of production is fixed, limiting the adjustment processes of the economy.

Production Function

A mathematical representation of the relationship between inputs used in production and the output generated.