The Rationing Function of Prices Means That

question 315

Multiple Choice

The rationing function of prices means that

• A) government is responsible for setting the prices of basic foods.
• B) all goods and services are produced by large firms.
• C) businesses determine what goods consumers should purchase.
• D) buyers and sellers synchronize their decisions through the price system.

---

Definitions:

Perfect Competition

A market structure where many firms sell identical products, entry and exit are easy, and no single buyer or seller can affect prices.

Marginal Cost (MC)

The increase in total cost that results from producing 1 more unit of output. Marginal costs reflect changes in variable costs.

Marginal Cost

The financial increment incurred by the production of an extra unit of a product or service.

Average Total Cost

It refers to the total cost per unit of output, calculated by dividing the total cost of production by the number of units produced.