Please show ALL WORK. 1. The owner-manager of Stella’s Pizza, earned $100,000 in
ID: 1216000 • Letter: P
Question
Please show ALL WORK.
1. The owner-manager of Stella’s Pizza, earned $100,000 in revenue last year. Stellas explicit costs of operation totaled $40,000. Stella is a registered nurse and could be earning $50,000 a year.. a. Stella's implicit cost of using owner-supplied resources is $______.
b. Stella's economic profit is $__________.
2. Which of the following would increase the supply of corn?
a. a decrease in the price of pesticides
b. a decrease in the demand for corn
c. a fall in the price of corn
d. a severe drought in the corn belt
3. If the quantity of Harley-Davidson motorcycles demanded decreases by 10% when the price increases by 20%, the price elasticity of demand for Harley-Davidson motorcycles is:
a. -0.50
b. -2.0
c. -10.0
d. -20.0
4. Which of the following will NOT affect the elasticity of demand for a product?
a. the number of substitutes
b. how long consumers have to adapt to price changes
c. the cost of producing the product
d. the percentage of the consumer’s budget spent on the product
e. all of the above will affect the elasticity of demand for a product
5. If the price elasticity of demand for a good is 0.8 and quantity demanded decreases by 40%, price must have
a. increased by 5%.
b. increased by 32%.
c. decreased by 20%.
d. increased by 50%.
6. For the equation Y = a + bX, the objective of regression analysis is to
a. estimate the parameters a and b.
b. estimate the variables Y and X.
c. fit a straight line through the data scatter in such a way that the sum of the squared errors is minimized.
d. both a and c
e. all of the above
7. The empirical demand function is estimated in linear form as Qx = 1105 -5.0P + .020M – 6Pr where is the estimated number of units of good X demanded, P is the price of X, M is income, and is the price of related good Y.
a. Is the related good is a substitute or complement?
b. At P = $4.00, M = $25,000, and Pr = $5.00, the predicted quantity demanded is _________ units of good X.
Explanation / Answer
1.
a.S’s implicit cost is $50,000.
Implicit cost is the opportunity cost of sacrificing the nursing activity.
b. S’s economic profit = Revenue – Explicit cost – Implicit cost
= 100,000 – 40,000 – 50,000
= $10,000
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