economics data bank

| August 14, 2017

25.During the
last few decades in the United States, health officials have argued that eating
too much beef might be harmful to human health. As a result there has been a
significant decrease in the amount of beef produced. Which of the following
best explains the decrease in production?
a.Beef
producers, concerned about the health of their consumers, decide
to produce relatively less beef.
b.Government
officials, concerned about consumers health, ordered beef
producers to produce relatively less beef.
c.Individual
consumers, concerned about their own health, decreased their
demand for beef, which lower the price of beef, making it less
attractive to
produce.
d.Anti?beef
protesters have made it difficult for both buyers and sellers of beef to
meet in the marketplace

26.A consumer
has preferences over two goods: pizza and beer. The four bundles shown in the table
below lie on the same indifference curve for the consumer.
Bundle Pizza Beer
A 2 8
B 2 2
C 9 2
D 6 2
Which of the following statements regarding these bundles is correct?
a.The goods
are perfect substitutes for this consumer.
b.The goods
are perfect complements for this consumer.
c.These
bundles violate the property that indifference curves are bowed inward.
d.These
bundles violate the property that indifference curves do not cross.

27.Demand
curve for normal goods slope downward because
a.the
substitution effect of a price change is greater than the income effect.
b.substitution
and income effects work in the same direction.
c.the income
effect is greater than the substitution effect.
d.None of the
above; demand curve for normal goods slope upward.

28.You are in
charge of the local city?owned golf course. You need to increase the revenue
generated by the golf course in order to meet the expenses. The mayor
advises you to increase the price of around of golf. The city manager
recommends
reducing the price of a round of golf. You realize thata.the mayor thinks demand is elastic and the city manager thinks demand
Is inelastic
b.both the
mayor and city manager think that demand is elastic
c.both the
mayor and city manager think that demand is inelastic
d.the mayor
thinks demand is inelastic and the city manager thinks demand is
elastic

29.For
perfectly competitive firms, what is the relationship between market price (P),
average revenue (AR), and marginal revenue (MR)?
a.P = AR = MR
b.P > AR =
MR
c.P = AR >
MR
d.P = AR < MR 30.In the prisoners’ dilemma, a.the prisoners easily collude in order to achieve the best possible payoff for both. b.only one player has a dominant strategy. c.when each player chooses his dominant strategy the players achieve the best joint outcome. d.when each player chooses his dominant strategy the players reach a Nash equilibrium. 31.Which of the following statements is correct? a.If marginal cost is rising, then average total cost is rising. b.If marginal cost is rising, then average variable cost is rising. c.If average variable cost is rising, then marginal cost is minimized. d.If average total cost is rising, then marginal cost is greater than average total cost. 32.Which of the following best describes the idea of excess capacity in monopolistic competition? a.Firms produce more output than is socially desirable. b.The output produced by a typical firm is less than what would occur at the minimum point on its ATC curve. c.Due to product differentiation, firms choose output levels where P > ATC.
d.Firms keep
some surplus output on hand in case there is a shift in the demand
for their product.

33.A
free?rider problem exists for any good that is NOT
a.rival.
b.a private
good.
c.free.
d.excludable.

34.A reduction
in a monopolist’s fixed costs would
a.decrease
the profit?maximizing price and increase the profit?maximizing quantity
produced.
b.increase
the profit?maximizing price and decrease the profit?maximizing quantity
produced.
c.not effect
the profit?maximizing price or quantity.
d.possibly
increase, decrease or not effect profit?maximizing price and quantity,
depending on the elasticity of demand.

35.A consumer
is currently spending all of her available income on two goods: music CDs and DVDs.
At her current consumption bundle she is spending twice as much on CDs as she
is on DVDs. If the consumer has $120 of income and is consuming 10 CDs and 2
DVDs, what is the price of a CD?
a.$4
b.$8
c.$12
d.$20

36.The accountants hired by Davis Golf
Course have determined total fixed cost to be $75,000, total variable cost to
be $130,000, and total revenue to be $145,000. Because of this information, in the
short run, Davis Golf Course should
a.shut?down.
b.exit the
industry.
c.stay open
because shutting down would be more expensive.
d.stay open
because the firm is making an economic profit.

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