In a Free-Market System, Producers Will React to an Increase

question 109

Multiple Choice

In a free-market system, producers will react to an increase in demand when

• A)the price goes up.
• B)the government announces the increased demand.
• C)their costs increase.
• D)the free press publishes news of the increased demand.

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Definitions:

Scenario 1-3

A hypothetical or real situation used to illustrate a particular case or outcome, typically numbered for organization.

Marginal Cost

Marginal cost is the change in total cost that arises when the quantity produced is incremented by one unit; it's the cost of producing one more unit of a good.

Opportunity Cost

The loss of potential gain from other alternatives when one option is chosen.