The Optimal Mix of Output May Not Be Produced by an Economy

question 5

Multiple Choice

The optimal mix of output may not be produced by an economy because of the existence of

• A) Inequity.
• B) Internalities.
• C) Public goods.
• D) Production possibilities.

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Definitions:

Short Run

In economics, the short run refers to a period during which at least one of a firm's inputs cannot be changed, limiting its capacity to adjust to demand changes.

Long Run

A period during which all factors of production and costs are variable, allowing full adjustment to any change in market conditions.

Average-Total-Cost Curve

A graphical representation showing the relationship between the average total cost of producing a good and the quantity of the good produced.

Diminishing Marginal Product

A principle stating that, holding all else constant, an increase in the quantity of one input will eventually lead to lower additional output per unit of input.