The Essential Coordinating Mechanism of a Free-Market Economy Is

question 91

Multiple Choice

The essential coordinating mechanism of a free-market economy is

• A)allocative efficiency.
• B)productive efficiency.
• C)profit maximization.
• D)the price system.
• E)opportunity cost.

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Definitions:

Variable Costs

Costs that vary directly with the level of production or the volume of output.

Fixed Costs

Costs including rent, salaries, and insurance that stay the same regardless of production or sales amounts.

Variable Costs

Costs that fluctuate with the level of production or sales volume, such as materials and labor.

Fixed Costs

Expenses that do not change in total regardless of changes in the volume of goods or services produced or sold.