What Happens When Goods Are Available in an Economy Free

question 28

Multiple Choice

What happens when goods are available in an economy free of charge

• A)Market forces cannot be used to allocate resources.
• B)Too many of these goods will be produced since there is no cost of production.
• C)The product will have no value for the majority of the population.
• D)Goods are not available in market economies free of charge.

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Definitions:

Marginal Cost Curve

A graphical representation that shows how the cost of producing one more unit of a good varies as the quantity of production increases.

Average Cost Curve

A graphical representation that shows how the cost per unit of producing a good changes with changes in the volume of output.

Cost-output Elasticity

Cost-output elasticity measures the responsiveness of production costs to changes in the quantity of output produced, indicating how cost-efficiently a firm can adapt to changes in production volume.

Long-run Cost Function

Refers to a firm's costs of production when all inputs, including capital, are variable and can be adjusted.