Why Does Total Output in an Economy Increase When Each

question 194

Multiple Choice

Why does total output in an economy increase when each person specializes?

• A) because there is much less competition for the same resources
• B) because each person spends more time producing that product for which they have a comparative advantage
• C) because a wider variety of products can be produced with specialization
• D) because more people will be producing products than before

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Definitions:

Output

The total amount of goods or services produced by a company, industry, or economy during a given period.

Average Variable Cost

The total variable costs of production divided by the quantity of output produced, representing the variable cost per unit of output.

Average Total Cost

The sum of all production costs divided by the quantity of output produced, essentially indicating the per-unit cost of production.

Marginal Cost

Marginal cost is the additional cost incurred by producing one more unit of a good or service, important for decision-making on production levels.