Which of the following explains the relationship between price and the quantity supplied?
a. When expanding output, firms will incur greater total costs.
b. As the price of a commodity falls, producers will find it more profitable to use higher-priced inputs in their production process.
c. As a result of rising production costs, firms can increase profits by expanding output only if the price of output increases.
d. To expand output, firms must hire more resources, which are always of poorer quality.
e. Consumers want more at lower prices.
C
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A market system tends to restrict business risk to owners and investors. This results in which of the following benefits?
A. It encourages more people to become entrepreneurs. B. Firms have to pay more to attract inputs, as these inputs have to share the risk. C. Firms focus attention on prudent risk management, as it is profitable to manage risk. D. Income becomes more equally distributed.
The firm in a perfectly competitive industry is a
A. price taker. B. price dealer. C. price maker. D. price seeker.