The Ability to Spread Fixed Costs Over a Large Volume,and

question 35

Multiple Choice

The ability to spread fixed costs over a large volume,and the ability of large-volume producers to utilize specialized employees and equipment that are more productive than less-specialized employees and equipment,are both sources of:

• A)first-mover disadvantages.
• B)economies of scale.
• C)conflict in international trade.
• D)rising production costs.

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Definitions:

Diamond-water Paradox

The contradiction observed in value theory where essential goods like water have low prices, while non-essential goods like diamonds have high prices.

Essential Goods

Products that are necessary for basic living and well-being, often unchanged by changes in income.

Nonessential Goods

Products and services considered as non-critical for survival or basic living standards.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to replace more expensive items with cheaper ones.