If Total Production Is Greater Than Total Expenditures

question 166

Multiple Choice

If total production is greater than total expenditures,

• A) there will be an increase in saving.
• B) there will be an increase in inventories.
• C) firms will then increase production.
• D) firms will then increase prices.

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Definitions:

Productive Efficiency

A point at which an economy operates at the lowest possible cost by utilizing all of its resources efficiently.

Pure Nondiscriminating Monopolist

A monopolist who charges all consumers the same price for a good or service, regardless of the quantity purchased or consumer preferences.

Pure Competitor

A firm in a purely competitive market that sells products identical to those of other firms, making it a price taker with no control over market price.

Pure Monopoly

A market structure where a single seller controls the entire supply of a product or service, with no close substitutes, leading to significant market power.