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The Metaphor Used to Describe the Working of the Price

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The metaphor used to describe the working of the price system to achieve efficiency in a free market is


Definitions:

Bushels

A measurement of volume mainly used in the United States for quantifying agricultural products.

Diminishing Returns

A principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain at a constant.

Average Variable Cost

The total variable cost divided by the quantity of output produced, representing the average cost of production excluding fixed costs.

Average Total Cost

The sum of all production costs divided by the quantity of output produced, representing the cost per unit of output including both fixed and variable costs.

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