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:

Total Cost

The complete cost of producing or acquiring goods or services, including direct costs, indirect costs, and overheads.

Trading Securities

Financial assets held by a firm for the purpose of short-term gain and which can be sold in the public market.

Fair Value

The price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Total Cost

The complete cost of production or operations, including fixed and variable costs, that a company incurs in providing goods or services.