Question

3.What good is most likely to have a negative income elasticity of demand?

designer clothing

steak

pizza

caviar

instant noodles

4.

When two goods are substitutes for each other, what will the cross-price elasticity be?

It will be zero.

The cross-price elasticity will initially be positive but eventually become negative.

It will be negative.

It is unaffected by goods being substitutes.

It will be positive.

5.

A nation will engage in voluntary trade if

the terms are mutually beneficial for both parties.

it allows a trade partner to specialize.

the trade is approved by the World Trade Center.

it lacks a comparative advantage in the production of every good.

there are no domestic costs associated with trade.

Answer 1

3.

Among the given goods, instant noodles will have a negative income elasticity of demand means as income increases demand for inferior good decreases and give negative income elasticity of demand.

the correct option is (e)

4.

When two goods are substitutes, cross-price elasticity is positive implies when the price of one good increases then demand for the substitute good also increases.

the correct option is (e)

5.

A nation would voluntarily engage in trade when both parties are mutually benefited from trade.

the correct option is (a)