Economic Analysis Suggests That Gains from Specialization and Exchange

question 81

Multiple Choice

Economic analysis suggests that gains from specialization and exchange

• A) will not be realized unless a central planning authority requires that all goods be produced by the low opportunity cost supplier.
• B) will be realized if individuals are allowed to pursue goals that are in their own self-interest.
• C) will not be realized unless business firms employ economists when making decisions about the proper combination of resources to utilize in the production process.
• D) will be realized if individuals place the public interest above the pursuit of their own self-interest.

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Definitions:

Marginal Revenue

The additional income that is generated by increasing product sales by one unit.

Average Revenue

The revenue a company generates per unit of output sold.

Profit (or Loss) Per Unit

The amount of money gained or lost on each unit of a product sold, calculated as the difference between the selling price and the cost of production.

Total Profit

is the financial gain made by a business after subtracting all expenses, taxes, and costs associated with generating the revenue.