When Competition Is Present and Property Rights Protected and Enforced

question 120

Multiple Choice

When competition is present and property rights protected and enforced, market prices will

• A) discourage profit-seeking business firms from producing efficiently.
• B) direct entrepreneurs toward production of goods that are inferior in quality.
• C) encourage self-interested individuals to develop skills that are expected to be valuable in the future.
• D) always decrease.

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Definitions:

Average Variable Cost

The total variable costs of production (costs that change with output level) divided by the quantity of output produced, indicating the variable cost per unit of output.

Average Fixed Cost

The fixed costs of production (those that do not change with the level of output) divided by the quantity of output produced.

Average Total Cost

The cost of producing one unit, calculated by dividing the entire production cost by the quantity of units made.

Average Variable Cost

The variable cost of production (costs that change with the level of output) divided by the number of units produced, showing the variable cost per unit.