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lectur5-page26 - (opportunity costs How much of each good...

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26 26 HOW DO WE ALLOCATE THESE SCARCE RESOURCES ? u WHAT SHOULD WE PRODUCE ? u HOW MUCH OF EACH GOOD OR SERVICE SHOULD WE PRODUCE ? What should we produce? Only those commodities for which consumers are willing to pay a price per unit sufficiently high enough to cover at least the full cost of producing them will be supplied by producers in the long run. The full cost of production includes all explicit (accounting) costs and implicit
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Unformatted text preview: (opportunity) costs. How much of each good or service should we produce? If consumers offer higher prices, consumers can normally induce producers to increase the quantity of a commodity that they will supply per unit of time. If consumers offer lower prices, consumers normally induce producers to decrease the quantity of a commodity that they will supply per unit of time....
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