How Does a Market System Prevent People from Getting as Many

question 196

Multiple Choice

How does a market system prevent people from getting as many goods and services as they wish?

• A)Governments interfere with the market mechanism to influence the allocation of goods and services.
• B)In a market system,firms can charge any price they want,thus preventing poor people from getting as many goods and services as they wish.
• C)The market system allocates goods and services to those who are able to pay for those products and therefore income is a limiting factor.
• D)The government imposes taxes on those who earn beyond a certain amount of income.

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Definitions:

Average Costs

The total cost of production divided by the quantity produced, often used to evaluate production efficiency.

Fixed Costs

Costs that remain constant regardless of the level of production or sales activities, such as rent, salaries, and insurance premiums.

Marginal Costs

Marginal costs represent the change in total production cost that arises when the quantity produced is incremented by one unit, essentially the cost of producing one additional unit of a good.

Marginal Productivity

Marginal productivity is the additional output that is produced by using one more unit of a certain input, assuming that all other inputs remain constant.