The Price of Chicken Falls, Causing the Demand Curve for Beef

question 264

Multiple Choice

The price of chicken falls, causing the demand curve for beef to shift leftward, while at the same time a bumper corn crop reduces the cost of feeding steers. These changes result in

• A) an increase in the equilibrium quantity of beef.
• B) no change in the equilibrium quantity of beef.
• C) an increase in the equilibrium quantity of beef if the shift in the demand curve is smaller than the shift in the supply curve.
• D) an increase in the equilibrium quantity of beef if the shift in the demand curve is larger than the shift in the supply curve.

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Definitions:

Rent-seeking Behavior

Activities undertaken by individuals or firms to increase their own wealth without creating new wealth, often through manipulating the social or political environment in which economic activities occur.

X-inefficiency

X-inefficiency occurs when a firm lacks the incentive to control costs, leading to inefficiency and higher expenditure than is necessary for the level of output produced.

Economies of Scale

Economies of scale refer to the cost advantage achieved by an increase in production, which typically leads to a reduction in average cost per unit as scale increases.

Average Total Costs

Average total costs represent the total costs of production (fixed and variable costs combined) divided by the quantity of output produced.