Consider two restaurants located next door to each other: Quick Burger and The Sunshine Café. If Quick Burger opens a drive-through window, the increased traffic and noise will bother customers seated outside at The Sunshine Café. The table below shows the monthly payoffs to Quick Burger and The Sunshine Café when Quick Burger does and does not operate a drive-through window. Quick Burger Operates aDrive-Through WindowQuick Burger Does NotOperate Drive-Through WindowQuick Burger$24,000$15,000The Sunshine Café$11,000$23,000Is it socially optimal for Quick Burger to operate a drive-through window?
A. Yes, because total payoffs are higher when Quick Burger operates a drive-through window.
B. No, because The Sunshine Café's payoff is lower when Quick Burger operates a drive-through window.
C. Yes, because Quick Burger's payoff is higher when Quick Burger operates a drive-though window.
D. No, because total payoffs are higher when Quick Burger does not operate a drive-through window.
Answer: D
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Which of the following statements does not explain why US health care expenditures are higher than in other countries?
A) Government policies have shifted the health care production function downward over time. B) Consumer incomes have increased, which allows consumers to purchase more health care. C) The US health care system is relatively inefficient compared to other countries. D) Demand for health care in the US has increased, so health care production occurs at a higher point on the total product curve than in other countries.
A bus is mostly filled with passengers and ready to travel from Los Angeles to San Francisco. At the last minute, a person comes running up to the bus and takes a seat. The change in the bus company's total cost as a result of transporting one more passenger on this trip is called
a. marginal cost b. average total cost c. variable cost d. fixed cost e. opportunity cost
Which of the following would be a consequence of substitution bias in the CPI?
A) Judges would award child support payments that would not adequately keep up with the true cost of inflation. B) Businesses would overcompensate employees for inflation when giving cost of living raises. C) Social Security payments would not adequately compensate retired workers for inflation. D) The inflation rate based on the CPI would underestimate the true level of inflation.
If a monopolist can sell 2 units at price of $200 per unit and 3 units at a price of $180 per unit, its marginal revenue at an output of 3 is
A) $-20.00. B) $80.00. C) $140.00. D) $180.00.