The Principle of Substitution Plays a Central Role in Resource

question 48

Multiple Choice

The principle of substitution plays a central role in resource allocation because it demonstrates that

• A)firms will find it profitable to make abundant use of relatively scarce factors.
• B)methods of producing the same commodity will not differ from one country to another.
• C)firms can use all factors of production interchangeably with no impact on their costs.
• D)prices will be relatively low for those factors for which demand is high relative to supply.
• E)relative factor prices reflect relative scarcities of factors in the economy and so firms will find it profitable to make abundant use of relatively abundant factors.

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Definitions:

Anglo-American Mother

Anglo-American mother generally refers to a mother of English descent or nationality, particularly in the context of America, often highlighting cultural heritage or identity.

Hypodescent

Refers to a societal rule that assigns a person with mixed ancestry to the social category of the subordinate or minority group rather than the dominant one.

Discriminate

To differentiate or make distinctions between individuals or groups often based on prejudice or unjust grounds such as race, sex, or age.

Caste System

A traditional form of social stratification characterized by hereditary transmission of lifestyle, occupation, and social status.