Stagnation Can Occur in Planned Economies Because

question 99

Multiple Choice

Stagnation can occur in planned economies because:

• A) entrepreneurial individuals have few economic incentives for innovation.
• B) private ownership of means of production leads to exploitation of workers.
• C) prices of goods and services are fixed by market forces of demand and supply.
• D) lack of barriers to trade results in increased competition for domestic producers.

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Definitions:

Average Total Costs

The total cost of production divided by the quantity of output produced; it includes both fixed and variable costs.

Economies of Scale

Refers to the cost advantage that arises with increased output of a product, where the average cost per unit decreases as production scales up.

Diseconomies of Scale

The phenomenon where a company's production costs increase as it produces more, resulting in a decrease in efficiency.

Output Units

Quantitative measures of production, representing the number of units of goods or services produced.