When a Good or Service Is Supplied Under Competitive Conditions

question 491

Multiple Choice

When a good or service is supplied under competitive conditions, economic analysis indicates that with the passage of time, the quality of the product will

• A) tend to improve, but its real price will generally rise.
• B) tend to improve, and its real price will generally fall.
• C) decline, and its real price will generally rise.
• D) decline, and its real price will fall.

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Definitions:

Pollution Emissions

The release of pollutants into the environment, typically referring to harmful substances discharged from industries, vehicles, and other sources.

Marginal External Cost

The cost resulting from producing one additional unit of a good that is incurred by someone other than the producer.

Fixed Proportions Technology

Fixed proportions technology is a production process where inputs must be used in strict, fixed ratios to produce outputs, with no possibility of substitution between inputs.

Pollution

The presence of substances in the environment that are harmful to human health, natural ecosystems, or the climate.