Writing in the New York Times on the Technology Boom

question 140

Multiple Choice

Writing in the New York Times on the technology boom of the late 1990s, Michael Lewis argues, "The sad truth, for investors, seems to be that most of the benefits of new technologies are passed right through to consumers free of charge." What does Lewis means by the benefits of new technology being "passed right through to consumers free of charge"?

• A)Firms in perfect competition are price takers. Since they cannot influence price, they cannot dictate who benefits from new technologies, even if the benefits of new technology are being "passed right through to consumers free of charge."
• B)In perfect competition, price equals marginal cost of production. In this sense, consumers receive the new technology "free of charge."
• C)In the long run, price equals the lowest possible average cost of production. In this sense, consumers receive the new technology "free of charge."
• D)In perfect competition, consumers place a value on the good equal to its marginal cost of production and since they are willing to pay the marginal valuation of the good, they are essentially receiving the new technology "free of charge."

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Definitions:

Investment Contracts

Financial contracts that typically denote a type of investment security, entitling the investor to specific returns.

Securities Exchange Act

A U.S. law enacted in 1934 to govern the trading of securities, such as stocks and bonds, to protect investors against malpractice.

Securities Act

A U.S. law enacted in 1933 that requires transparency in the offer and sale of securities to protect investors from fraud.

Misappropriating Information

The act of taking information without permission, often confidential, and using it for personal gain or advantage.