Price Controls

question 140

Multiple Choice

Price controls:

• A) are regulations that set a maximum or minimum legal price for a particular good.
• B) allow a market to reach equilibrium.
• C) prevent a good from being bought or sold.
• D) All of these are correct.

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Definitions:

Long-run Average Total Cost

The average cost per unit of output when all inputs, even physical capital, are adjustable, over a sufficient time period.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, characterized by a reduction in average cost per unit when output is increased.

Diseconomies of Scale

The phenomenon where production costs per unit increase as the volume of output increases.

Constant Returns to Scale

A situation in economics where increasing the inputs in production proportionately increases the output.