If a Commodity's Price Is Above Its Marginal Cost, the Market

question 154

True/False

If a commodity's price is above its marginal cost, the market will tend to produce too much of the good.

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Definitions:

COGS

Stands for Cost of Goods Sold; it's the direct cost attributable to the production of the goods sold by a company, including both raw materials and labor costs.

Compensating Balance

A minimum bank account balance a borrower must maintain as part of a loan agreement.

Effective Annual Interest Rate

The real return on a savings account or any interest-bearing investment, taking into account the effect of compounding interest.

Interest Rate

The proportion of a loan charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.