Resources Are Directed from One Industry to Another by

question 58

Multiple Choice

Resources are directed from one industry to another by

• A)Changes in market prices.
• B)Market failure.
• C)Government failure.
• D)None of the choices are correct.

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Definitions:

Purely Competitive Market

A market structure characterized by a large number of small firms, identical products, and free entry and exit, which leads to firms being price takers.

Long-run Equilibrium

A state in which all firms in an industry are making normal profit, with no incentive for new firms to enter or existing firms to leave the market.

Producer Surplus

The difference between what producers are willing to accept for a good or service and the actual price they receive, representing economic gain.

Marginal Cost

The increase in total cost that arises from producing one additional unit of a product or service.