A Forecast That Is Based on All the Relevant Information

question 2

Multiple Choice

A forecast that is based on all the relevant information available is

• A)usually no better than a random guess given that the future bears many uncertainties.
• B)usually accurate.
• C)called a rational expectation.
• D)useful only in the prediction of cost-push inflation.
• E)useful only in the prediction of demand-pull inflation.

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Definitions:

Economies Of Scale

Cost advantages reaped by companies when production becomes efficient, resulting in a decrease in the per-unit cost as the output increases.

AVC

Average Variable Cost, which is the cost a company incurs to produce one additional unit of a product, excluding fixed costs.

ATC

Average Total Cost, the total cost of production divided by the number of units produced, often used in economics to analyze production efficiency.

AVC

Average Variable Cost, which is the total variable cost divided by the quantity of output produced, representing the variable cost per unit of output.