Weak Government Enforcement of Contracts and Laws Tends to

question 93

Multiple Choice

Weak government enforcement of contracts and laws tends to

• A) increase economic efficiency by minimizing government interference.
• B) stimulate innovation and investment.
• C) discourage economic activity by encouraging private-sector coercion such as blackmail and extortion.
• D) not affect economic activity, as incentives for theft and deception are low.

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Definitions:

Average Fixed Cost

The total fixed costs of production divided by the quantity of output produced.

Marginal Cost

The change in total production cost that arises when the quantity produced is incremented by one unit.

Average Total Cost

The total cost of production divided by the number of units produced, which includes both fixed and variable costs.

Average Total Cost

The total cost divided by the number of goods or services produced, representing the per unit cost of production.