The Concept of "The Invisible Hand" Suggests That to Attain

question 12

Multiple Choice

The concept of "the invisible hand" suggests that to attain efficiency,the government should

• A) guide economic activity.
• B) set prices.
• C) leave prices and output decisions to the competitive market.
• D) regulate all production decisions, but not price decisions.
• E) make sure that a command system is used to allocate resources.

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Definitions:

Economic Losses

Financial losses experienced by a business or economy, often resulting from unfavorable business conditions or the production of goods for which the cost exceeds the revenue.

Variable Costs

Costs that vary directly with the level of production, such as materials and labor.

AVC

Average Variable Cost, referring to the variable cost per unit of output.

MC

An abbreviation commonly used for marginal cost, which is the cost added by producing one additional unit of a product or service.