Under conditions of first-degree price discrimination A) production will equal that which would exist under perfect competition. B) production will exceed that which would prevail under perfect competition. C) prices will be lower than under perfect competition. D) production will always be lower than under perfect competition. ANSWER A
The forecasting technique which involves the use of the least squares statistical method to examine trends, and takes into account seasonal and cyclical fluctuations, is known as A) compound growth rate projection. B) the Delphi method. C) time series projection. D) exponential smoothing projection. ANSWER C
The above figure shows the market for steel ingots. An externality can be seen because A) the social marginal cost exceeds the private marginal cost. B) the private marginal cost exceeds the social marginal cost. C) the optimal quantity of steel is zero. D) not enough steel gets produced by the competitive market. ANSWER […]
If a production process creates pollution, a competitive market produces excessive pollution because A) private marginal cost of pollution exceeds its social marginal cost. B) social marginal cost of pollution exceeds its private marginal cost. C) the marginal benefit of pollution to the firm is zero. D) zero pollution is optimal. ANSWER B
Second-degree price discrimination occurs when A) different prices are charged for different blocks of services. B) different groups of buyers are charged different prices based on their price elasticities of demand. C) a different price is charged for each amount of a product purchased. D) None of the above ANSWER A
Quantitative forecasting that projects past data without explaining the reasons for future trends is called A) scientific forecasting. B) dumb forecasting. C) empirical forecasting. D) naïve forecasting. ANSWER D
The method of forecasting with leading indicators can be criticized for A) occasionally forecasting a recession when none ensues. B) forecasting the direction of the economy but not the size of the change in economic activity. C) frequent revisions of data after original publication. D) All of the above ANSWER D
If a production process creates positive externalities, a competitive market produces too few positive externalities because the producer A) does not pay all the costs of the externalities. B) does not receive compensation for the externalities. C) Both A and B. D) None of the above. ANSWER B
Empirical evidence from electric-power-producing firms suggests that the largest electric-power-producing firms are not natural monopolies because A) the average cost curve for these firms is U-shaped. B) no electric-power-producing firms are natural monopolies. C) the largest firms enjoy economies of scale. D) the designation of natural monopoly can only be bestowed by the government. […]
Explain how the Social Security program is partly an insurance plan and partly a form of welfare. What will be an ideal response? ANSWER Social Security is an insurance program to the extent that individuals pay contributions into the system and receive benefits in the future in proportion to their current contributions. Social Security […]
