Contracts Are

question 80

Multiple Choice

Contracts are:

• A)are command-based systems in which prices usually play a relatively small role.
• B)a set of promises intended to create economic value and enforceable by a court or some other agency, such as an arbitrator.
• C)are a mode of governance that facilitate the purchase and sale of standardized goods or services, often in repeated transactions.
• D)economic institutions that can greatly ease the process by which a transaction moves from proposal to commitment.

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Definitions:

Average Cost Curve

The average cost curve is a graphical representation showing how the average cost per unit of output varies with the level of output, typically U-shaped due to economies and diseconomies of scale.

Economies of Scale

Cost benefits that companies achieve because of their large scale of operations, generally resulting in a lower cost per output unit as the scale increases.

Per-Unit Costs

The average cost for each individual unit of product produced, taking into account all fixed and variable expenses.

Marginal Costs

The incremental cost involved in producing one more unit of a product or service.