ECON-E 201 Final: ECON E 201 Final Exam 2010 Spring Version 1 Solutions
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ECON-E 201 Full Course Notes
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Know the difference between normal and inferior goods: please note that none of the answers appears to be correct. The midpoint formula in economics is: (q2 q1)/(q1 + q2)/2 divided by (p2 p1)/(p1 + p2)/2. So the price elasticity of demand is . 0095/. 22 or . 043: the correct answer is e. an inferior good is the type of good for which demand declines as the level of income increases. A, b, c and d are incorrect because they describe something other than an inferior good: the correct answer is a. The monopolist earns supernormal or economic profits where tr tc is the greatest. In this question, this is the point where 3 units are demanded. At a price of , three units are demanded for total revenue of . The difference between tr and tc is : the correct answer is b. In the short run, firms will exit an industry when they are unable to cover their variable costs.
