Choose all correct statements about free enterprise (FE). FE can deter all evil behavior through participants seeking th
Posted: Thu May 05, 2022 6:56 am
Choose all correct statements about free enterprise (FE).
FE can deter all evil behavior through participants seeking their
own self-interest
FE allows individuals to govern themselves as God created them to
do.
FE rewards and encourages greed
FE is neutral toward individual sin in the sense that it neither
causes nor solves the individual sin problem
FE deters bad behavior by allowing "good actors" to shun "bad
actors" (i.e, refuse to do business with them)
In a fully-functioning FE economy, there will be no income
inequality
FE has produced more wealth than any other system in history
FE system needs government-enforced guardrails to deter and/or
punish theft of private property, lying, and breaking
agreements.
FE calls for limited government because governments tend to amass
power and extend their control if they are not limited by the
people.
By allowing individuals to pursue their self-interests, FE
facilitates wealth-creating transactions
QUESTION 44
Which one of the following is NOT a true statement about
indirect price discrimination? Choose the best answer.
You can't identify the customers by their price sensitivity before
they make their purchasse.
You can vary your price according to a factor that differentiates
between high and low price sensitivity customers.
Charging customers with military ID's less than other customers is
an example of indirect price discrimination.
Issuing coupons for a product is a form of indirect price
discrimination.
Charging different rental car prices on weekdays vs. weekends is an
example of indirect price discrimination.
Indirect price discrimination only works if the price discount
attracts price-sensitive customers and does not attract many price
insensitive customers (i.e., the low price elasticity customers do
not take advantage of the discount).
QUESTION 32
We know revenues decrease when you raise price into the range
where prices are elastic (i.e., absolute value of
elasticity>1.0), yet profits can increase as you raise price
into the elastic range. Explain how it is possible for
profits to increase in the rental car simulation when you raise
prices into the elastic range. Choose the best answer.
Variable costs saved from cars not rented at the hgiher price
exceed revenues lost from renting fewer cars at the higher price.
You are able to rent luxury cars at the higher price.
Your vehicle inventory maintenance costs decrease because you are
renting fewer cars at the higher price.
The higher price produces a higher contributiion margin per rented
car.
Economics teaches that profits are maximized when a company
operates where marginal revenues equal marginal costs (MR=MC).
Choose the answer that best explains why this is true.
Because when MR=MC the company is at least breaking even.
It is not true. If MR don't cover both MC and Fixed Costs,
the company will incur a loss, not make profits.
Any deviation from MR=MC will reduce profits. If MR>MC,
producing the next unit provides a contribution margin toward fixed
costs/profits, so produce it. If MR<MC, producing that
unit subtracts from the margin available for fixed costs/profit, so
don't produce it.
Marginal/incremental/extent decisions are what economics is all
about.
FE can deter all evil behavior through participants seeking their
own self-interest
FE allows individuals to govern themselves as God created them to
do.
FE rewards and encourages greed
FE is neutral toward individual sin in the sense that it neither
causes nor solves the individual sin problem
FE deters bad behavior by allowing "good actors" to shun "bad
actors" (i.e, refuse to do business with them)
In a fully-functioning FE economy, there will be no income
inequality
FE has produced more wealth than any other system in history
FE system needs government-enforced guardrails to deter and/or
punish theft of private property, lying, and breaking
agreements.
FE calls for limited government because governments tend to amass
power and extend their control if they are not limited by the
people.
By allowing individuals to pursue their self-interests, FE
facilitates wealth-creating transactions
QUESTION 44
Which one of the following is NOT a true statement about
indirect price discrimination? Choose the best answer.
You can't identify the customers by their price sensitivity before
they make their purchasse.
You can vary your price according to a factor that differentiates
between high and low price sensitivity customers.
Charging customers with military ID's less than other customers is
an example of indirect price discrimination.
Issuing coupons for a product is a form of indirect price
discrimination.
Charging different rental car prices on weekdays vs. weekends is an
example of indirect price discrimination.
Indirect price discrimination only works if the price discount
attracts price-sensitive customers and does not attract many price
insensitive customers (i.e., the low price elasticity customers do
not take advantage of the discount).
QUESTION 32
We know revenues decrease when you raise price into the range
where prices are elastic (i.e., absolute value of
elasticity>1.0), yet profits can increase as you raise price
into the elastic range. Explain how it is possible for
profits to increase in the rental car simulation when you raise
prices into the elastic range. Choose the best answer.
Variable costs saved from cars not rented at the hgiher price
exceed revenues lost from renting fewer cars at the higher price.
You are able to rent luxury cars at the higher price.
Your vehicle inventory maintenance costs decrease because you are
renting fewer cars at the higher price.
The higher price produces a higher contributiion margin per rented
car.
Economics teaches that profits are maximized when a company
operates where marginal revenues equal marginal costs (MR=MC).
Choose the answer that best explains why this is true.
Because when MR=MC the company is at least breaking even.
It is not true. If MR don't cover both MC and Fixed Costs,
the company will incur a loss, not make profits.
Any deviation from MR=MC will reduce profits. If MR>MC,
producing the next unit provides a contribution margin toward fixed
costs/profits, so produce it. If MR<MC, producing that
unit subtracts from the margin available for fixed costs/profit, so
don't produce it.
Marginal/incremental/extent decisions are what economics is all
about.