Eco 202 - Practice Exam 2 (Summer 2017).doc - ECO 202 Practice Exam 2 Summer 2016 Use the following to answer question 1 1(Table Market for Pizza Look

Eco 202 - Practice Exam 2 (Summer 2017).doc - ECO 202...

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ECO 202 – Practice Exam 2 Summer 2016 Use the following to answer question 1: 1.(Table: Market for Pizza) Look at the table Market for Pizza. The price elasticity of demand for pizza between the prices of $14 and $12 per pizza when income is $1,000 per month is (use the midpoint method): A)0.6.C)1.6.D)2. *B) 1. Page 1
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Use the following to answer question 2: 2. (Table: Market for Pizza) Look at the table Market for Pizza. In the table, when income changes from $1,000 to $1,400 per month, the income elasticity of demand for pizza (using the midpoint method) at a price of $14 per pizza is: *A –1. B) 1. C) 1.25. D) 1.5. 3.If your purchases of shoes increase from 9 pairs per year to 11 pairs per year when the price of shirts increases from $8 to $12, for you, shoes and shirts are considered: A)inferior goods.B)luxury goods.C)*substitute goods.D)complementary goods. 4.The cross-price elasticity of demand for Coke with respect to the price of Pepsi has beenestimated to be 0.61. If the price of Pepsi falls by 10% in a period, how will that affect the demand for Coke in that period, all other things unchanged? A)The demand for Coke will decrease but by less than 6.1%.B)The demand for Coke will decrease by 6.1%.* Page 2
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C)The demand for Coke will not change because many people prefer Coke to Pepsi.D)The demand for Coke will rise. 5.Suppose a local floral shop has explicit costs of $200,000 per year and implicit costs of $50,000 per year. If the store earned an economic profit of $50,000 last year, this means that the store's accounting profit equaled: A)$10,000.B)$50,000.D)$200,000. *C) $100,000. 6.Profit computed using explicit costs as the only measure of costs is: A)explicit profit.C)implicit profit.D)economic profit. *B) accounting profit. 7. Bessie wants to calculate the accounting and economic profits on her cattle farm in Nebraska. She pays $30,000 per year for the cost of raising cattle, $80,000 in wages, and $20,000 in insurance. She forgoes $30,000 per year that she could make as a teacher. If her total revenue equals $140,000, that means her accounting profit is ________ and her economic profit is ________. *A ) $10,000; –$20,000 B) $30,000; –$30,000 C) –$10,000; –$10,000 D) $60,000; $30,000
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  • Economics of production, Marginal Benefit Curve

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