ECON 312 Midterm: ECON 312 Fall 2017 Midterm 2 Version 2
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Select the most appropriate answer, and carefully bubble in the letter of the answer on your bubble form. Unless otherwise stated, assume markets are competitive and that the leftover principle holds. Suppose that the price of grain falls on world markets due to favorable weather elsewhere in the world. Assume the leftover principle holds and that farmers rent their land from landowners. Which of the following statements is/are true: local farmers" non-land profits per acre will fall in equilibrium. Local farmers" overall profits per acre (after rent is paid) will fall in equilibrium. The price of gas, which affects commuting costs: i only, ii only, iii only, i and ii only, i, ii and iii. Questions 5-8 refer to the following setup and diagram. Consider a farmer choosing between three pieces of land, each of equal size but different fertility. The world price of grain is a bushel and is expected to remain fixed.