The Most Important Way in Which Inefficiency Occurs Is

question 277

Multiple Choice

The most important way in which inefficiency occurs is

• A)producing more military goods instead of civilian goods.
• B)limiting economic growth by limiting capital spending.
• C)unemployment of labor and other resources.
• D)producing outside the production possibilities frontier.
• E)All of the responses are correct.

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Definitions:

Variable Costs

Costs that vary directly with the level of production or output, such as materials and labor.

Law of Diminishing Returns

The 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 inputs remain constant.

Cost Curve

A graphical representation showing the cost of producing different quantities of output, typically illustrating concepts such as marginal and average costs.

Per Unit Costs

The average cost incurred for producing or acquiring one unit of a product or service.