14. The price the government pays for standard weapons purchased from military contractors is determined by a pricing method called “historical costing.” Historical costing allows contractors to protect their profits by adding a percentage increase, based on the current rate of inflation, to the previous year’s contractual price. Which of the following statements, if true, is the best basis for a criticism of historical costing as an economically sound pricing method for military contracts? (A) The government might continue to pay for past inefficient use of funds. (B) The rate of inflation has varied considerably over the past twenty years. (C) The contractual price will be greatly affected by the cost of materials used for the products. (D) Many taxpayers question the amount of money the government spends on military contracts.(A) (E) The pricing method based on historical costing might not encourage the development of innovative weapons.
19. Recent estimates predict that between 1982 and 1995 the greatest increase in the number of people employed will be in the category of low-paying service occupations. This category, however, will not increase its share of total employment, whereas the category of high-paying service occupations will increase its share. If the estimates above are accurate, which of the following conclusions can be drawn? (A) In 1982 more people were working in low-paying service occupations than were working in high-paying service occupations. (B) In 1995 more people will be working in high-paying service occupations than will be working in low-paying service occupations. (C) Nonservice occupations will account for the same share of total employment in 1995 as in 1982. (D) Many of the people who were working in low-paying service occupations in 1982 will be working in high-paying service occupations by 1995.(A) (E) The rate of growth for low-paying service occupations will be greater than the overall rate of employment growth between 1982 and 1995.
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