The concept of "demand-determined output" requires ________ to remain constant as output increases.
A)technology of production
B)government purchases
C)firms' unit costs
D)labour productivity
E)the ratio of price setters to price takers

Question

Quizplus · Accepted Answer

The concept of "demand-determined output" implies that firms produce output based on the level of demand rather than their own production capacity. As firms increase production to meet higher levels of demand, their average unit costs should remain constant in order to maintain profitability. Therefore, firm's unit costs must remain constant as output increases for the concept of "demand-determined output" to hold true.

The Concept of "Demand-Determined Output" Requires ________ to Remain Constant