Economics: Production and Cost

The ______ is a social process that allocates relatively scarce resources to satisfy relatively unlimited wants.

In a market setting, the allocation of resources is achieved by ______ and sellers interacting.

The ______ function reflects the behavior of buyers or consumers.

The prices of the inputs determine the ______ of production.

Production processes increase the ability of inputs to satisfy wants by a change in ______ characteristics.

Producers and/or sellers have objectives such as maximizing ______ or minimizing cost per unit.

In a ______________________ economy, most economic decision-making is done through voluntary transactions according to the laws of supply and demand.

According to classical economists, the “invisible hand” of the profit motive and market incentives generally guided economic decisions down more ______________________ and efficient paths.

In a market economy, entrepreneurs marshal factors of production (land, labor, and capital) and combine them in cooperation with workers and financial backers to produce goods and services for consumers or other businesses to ______________________.

Market economies work using the forces of ______________________ and demand to determine the appropriate prices and quantities for most goods and services in the economy.

Economists broadly agree that ______________________ economies produce better economic outcomes, but differ on the precise balance between markets and central planning that is best for a nation's long-term wellbeing.

Classical economists, such as Adam Smith, David Ricardo, and Jean-Baptiste Say, were classically liberal free ______________________ advocates.

Most developed nations are technically ______ economies because they blend free markets with some government interference.

Market economies may still engage in some government interventions, such as ______, licensing, quotas, and industrial subsidies.

In market economies, the allocation of resources is determined by the profits that entrepreneurs hope to make by producing output that their customers will value beyond what the entrepreneurs paid for the ______.

Entrepreneurs that successfully allocate resources are rewarded with profits that they can reinvest in future business, and those who fail to do so either learn to improve over time or go out of ______.

Every economy in the modern world falls somewhere along a continuum running from pure ______ to fully planned.

In market economies, government often produces ______ goods, often as a government monopoly.