In a Market System, the "What Will Be Produced?" Question

question 246

Multiple Choice

In a market system, the "What will be produced?" question is ultimately decided by

• A) profitability of products.
• B) costs of production.
• C) workers in the firms.
• D) industry analysts.

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Definitions:

Diminishing Returns

A principle in economics that states as one input variable is incrementally increased, there comes a point when the rate of resultant output begins to decrease.

Variable Inputs

Inputs, such as labor and materials, whose usage changes according to the level of production.

Economies Of Scale

Cost advantages reaped by companies when production becomes efficient, as the scale of operation increases, leading to a reduction in average cost per unit.

Specialization

The focus of a business or individual on a limited scope of products or skills, allowing for increased efficiency and expertise.