A Surplus Exists in the Market for Barbie Dolls at the Prevailing

question 74

Multiple Choice

A surplus exists in the market for Barbie dolls at the prevailing price. What will eliminate the surplus?

• A) A price decrease, decreasing the quantity supplied and increasing the quantity demanded.
• B) A price decrease, decreasing the supply and increasing the demand.
• C) A price increase, decreasing the supply and increasing the demand.
• D) A price decrease, increasing the quantity supplied and increasing the quantity demanded.

---

Definitions:

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 and may even decrease.

Diseconomies of Scale

A phenomenon where production costs per unit increase as a firm's output increases, often due to inefficiencies that arise when companies become too large.

Smaller Percentage Increase

Refers to a rate of increase that is less significant or lower in proportion compared to another.

Average Costs

The cost per unit of output, calculated by dividing the total cost of production by the number of units produced.