It Is Inefficient for the Government to Charge a Price

question 61

Multiple Choice

It is inefficient for the government to charge a price for consuming a good,such as weather forecasts,because ________.

• A) too many forecasts will be produced
• B) the price cannot be set to cover all research costs
• C) no one will be willing to pay for these forecasts
• D) the marginal cost of providing this information to another consumer is zero

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Definitions:

Safety Stock

Additional inventory kept to prevent stockouts caused by fluctuations in demand or supply chain delays.

Reorder Point

A specific stock level that triggers the need to order more inventory to prevent stockouts, calculated by considering the lead time demand and safety stock.

Holding Cost Rate

The cost associated with keeping inventory in stock, including storage, insurance, and opportunity costs.

Standard Deviation

A statistical measurement that quantifies the variability or dispersion of a set of data points from its mean.