Many people have the impression that as production increases

In a purely competitive market, the supplier ofgoods and services has no control over the market price, because he producestoo little to influence market conditions. With no difference between hisproducts and the products __1__ his competitors, he will sell nothing if hecharges above the market price and he will sell all if he charges at or __2__the market price. However, in considering the price, he must take cost ofproduction __3__. There are times when he may be willing to sell below hiscost. This might happen when prices tumble for __4__ a short time. However, nobusiness person can __5__ lose money for a prolonged period. He must __6__ ofhis costs in relation to the market price if he is to compete successfully andearn a profit.

Many people have the impression that asproduction increases, costs per unit decrease. __7__ mass production has madethis true in certain industries and at certain levels of production, __8__logic and practical experience have shown that costs per unit begin to rise beyonda certain level of production. Some economists __9__ this principle as the lawof increasing costs.

The reason __10__ rise as production goes up iscomplex. However, it is easy to recognize that as production goes up, the needfor additional factors of production will also grow, resulting __11__competitive bidding in the marketplace for the factors of production. If aproducer needs __12__ skilled labor to produce more, and none of this labor isunemployed, the producer will have to get __13__ from other sources. This canbe done by __14__ higher wages. Higher bidding would also apply to the otherfactors of production. We must also recognize that not all labor is equallyproductive, __15__ not all land is equally fertile and not all ore is equally richin the mineral wanted.

1. A) to B) at C) of D) on

2. A) below B) beneath C) over D) above

3. A) to consider B) into consideration C) toconsideration D) in consideration

4. A) he believes will be B) what he believesbe C) what he believes will be D) he believes to be

5. A) afford to B) be affordable C) be affordedto D) have afforded

6. A) constantly aware B) constantlyknowledgeable of C) be constantly aware of D) constantly aware of

7. A) Because B) Since C) When D) While

8. A) both B) as well as C) also D) but

9. A) refer B) refer to C) call D) are referredto

10. A) cost B) the cost C) the costs D) costs

11. A) from B) in C) \ D) for

12. A) less B) numerous C) more D) many

13. A) them B) these C) it D) those

14. A) offering B) cutting C) reducing D)having

15. A) as just B) just as C) because D) while