Beef is a normal good. You observe that both the equilibrium price and quantity of beef have fallen over time. Which of the following explanations would be most consistent with this observation?
a. Consumers have experienced an increase in income, and beef-production technology has improved.
b. The price of chicken has risen, and the price of steak sauce has fallen.
c. New medical evidence has been released that indicates a negative correlation between a person's beef consumption and life expectancy.
d. The demand curve for beef must be positively sloped.
c
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If a good has an income elasticity of 1.83, then it:
A. is a luxury. B. probably has a lot of close substitutes available. C. is an inferior good, and a necessity. D. is a normal good, and a necessity.
In the absence of government
A. the free-rider problem is more likely to occur. B. public goods are likely to be overprovided. C. market failure is less likely to occur. D. public goods are likely to be underprovided.
A decrease in the stock of capital will cause the
A. production possibility frontier to shift outward. B. economy to move closer to its production possibility frontier. C. production possibility frontier to shift inward. D. economy to move down the production possibility frontier.
Refer to the diagram for the federal funds market. If the quantity of reserves rises from $100 billion to $150 billion, we can expect:
A. the federal funds rate to fall to 3.5 percent.
B. the discount rate to fall.
C. the prime interest rate to fall below 4.0 percent.
D. banks to become more cautious in lending.