The Invisible Hand of the Marketplace Acts to Allocate Resources

question 75

True/False

The invisible hand of the marketplace acts to allocate resources efficiently, but it does not necessarily ensure that resources are allocated fairly.

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Definitions:

Maximize Profits

The process by which a company seeks to achieve the highest possible financial gain from its operations, often by adjusting production, prices, and costs.

Marginal Revenue

The extra revenue generated by the sale of an additional unit of a product or service.

Marginal Cost

The expense incurred in manufacturing an extra unit of a product or service.

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, indicating excess over the opportunity cost.