The Arrow Impossibility Theorem Shows That

question 177

Multiple Choice

The Arrow impossibility theorem shows that

• A)democracy should be abandoned as a form of government.
• B)it is impossible to improve upon democratic voting methods as a mechanism for social choice.
• C)all voting systems are flawed as a mechanism for social choice.
• D)the median voter's preferences will always win in a two-way vote.

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Definitions:

Shutdown Point

The point in business operations where the revenue from the sale of goods or services is equal to the variable costs, beyond which the business would incur losses.

Break-Even Point

An output at which a firm makes a normal profit (total revenue = total cost) but not an economic profit.

Variable Costs

Costs that vary directly with the level of production.

Marginal Revenue

The increase in revenue that results from the sale of an additional unit of output.