A Necessary Assumption Behind the Invisible Hand Theorem Is That

question 50

Multiple Choice

A necessary assumption behind the invisible hand theorem is that:

• A) market forces are determined by cultural norms.
• B) market forces produce inefficient outcomes.
• C) the price mechanism is not constrained by political or social forces.
• D) people behave rationally.

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Definitions:

Price Discrimination

A pricing strategy where a seller charges different prices for the same product or service to different customers, not based on differences in costs.

Marginal Cost

The additional expense incurred from producing another unit of a product.

Marginal Revenue

The additional revenue that a company generates from selling one more unit of a good or service.

Average Total Cost

The total cost of production divided by the total number of units produced.