If Two Variables Are Related So That Increasing Values of One

question 28

Multiple Choice

If two variables are related so that increasing values of one variable are associated with increasing values of the other, then there is a (or ) relationship between the variables.

• A)positive; direct
• B)positive; inverse
• C)negative; direct
• D)negative; inverse

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Definitions:

Long Run

A timeframe during which all production factors and expenses can change, permitting adjustments to all inputs.

Allocative Efficiency

A state of the economy in which production is in accordance with consumer preferences; every good or service is produced up to the point where the last unit provides a utility to consumers equal to the cost of producing it.

Consumer Surplus

The difference in the amount consumers are prepared and have the means to pay for a service or good compared to the amount they actually do pay.

Producer Surplus

The difference between what producers are willing to accept for a good versus what they actually receive, often depicted as the area above the supply curve and below the market price.