The Simpler a Production Process,_____

question 82

Multiple Choice

The simpler a production process,_____

• A)the greater the cost of production.
• B)the greater the transaction cost of using markets.
• C)the more likely a client is to use a market to organize production.
• D)the more likely a client is to use centralized control to organize production.
• E)the higher the cost of hierarchal control and supervision.

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Definitions:

Profit-Maximizing

The process of finding the level of output at which a firm makes the highest profit.

Short Run

A period in which at least one factor of production is fixed and cannot be varied by the firm.

Long Run

A period sufficient for all inputs in production to be adjusted, including physical capital and labor.

Allocative Efficiency

Allocative Efficiency occurs when resources are distributed in a way that maximizes the net benefit to society, ensuring that the right goods are produced to meet consumer preferences.