-
26)What pair of goods is likely to have the largest cross-price
elasticity in absolute value?
Multiple Choice
a)Ramen noodles and a Rolex watch
b)Cross-price elasticity is always negative, and simply reported
in absolute value.
c)Butter and margarine
d)Peanut butter and jelly
27)If the price of butter increases 5 percent and the amount of
margarine purchased increases 25 percent, then the cross-price
elasticity of these goods is:
Multiple Choice
a)0.2.
b)- 0.2.
c)5.
d)- 5.
28)The determinants of price elasticity of...
-
9.The more time people have to adjust to a price change,
A.the less elastic their demand will be.
B. will not affect the elasticity of their response, unless the
good in question is a luxury good.
C.the more elastic their demand will be.
D.will not affect the elasticity of their response, unless the
good in question is a necessity.
10.When a good has many close substitutes available, its demand
is likely to be
A.less price elastic than for goods without...
-
When the income elasticity of demand for a good is
negative, one can correctly conclude that:
total revenue will decrease when the price increases.
the good is a substitute.
the good is a complement.
the good is a normal good.
the good is an inferior good.
As the price is raised along a straight-line demand
curve, the demand curve becomes more elastic.
True
False
Income elasticity of demand is expected to be
_____.
relatively high for necessities
relatively low for...
-
Refer to Figure 5-1. A perfectly elastic demand curve is shown
in
Panel D.
Panel A.
Panel C.
Panel B.
Refer to Figure 5-5. The data in the diagram indicates that
DVDs
are luxury goods.
are both luxury goods and price inelastic goods.
are price inelastic goods.
are both necessities and price inelastic goods.
are necessities.
3-
Consider the following pairs of items:
a. shampoo and conditioner
b. iPhones and earbuds
c. a laptop computer and a desktop computer
d....
-
If firms have to change their production techniques in
order to change the quantities they supply, their response to a
price change will be less in a period of a year as compared to what
they can do in a month.
True
False
When the cross-price elasticity of demand for two goods
is a positive number, one can correctly conclude that:
the goods are inferior goods.
the goods are complements.
the goods are substitutes.
the goods are normal goods.
total...
-
21. A positive income elasticity of demand
coefficient indicates that
a. a product is an inferior
good
b. two products are substitute
goods
c. two products are
complementary goods
d. a product is a normal
good
22. All the combinations of two products that
will yield the same total utility to a consumer are reflected
in
a. the budget line
b. the marginal rate of
substitution
c. an indifference curve
d. the...
-
2. The demand curve for a product is given by Qdx= 1,000-2px .02Pz, where Pz= $400a. What is the own price elasticity of demand when Px= $154? Is demand elastic or inelastic at this price? What would happen to the firm’s revenue if it decided tochange a price below $154?b. What is the own price elasticity of demand when Px= $354? Is demand elastic or inelastic at this price? What would happen to the firm’s revenue if it decided tocharge...
-
If a firm raised its price and discovered that its total revenue
fell, then the demand for its product is ___________
a. relatively inelastic
b. perfectly inelastic
c. income inferior
d. relatively elastic
If demand is (relatively) price inelastic, total revenue is
___________
a. directly related to quantity demanded
b. inversely related to price
c. inversely related to quantity demanded
d. directly related to price
e. unrelated to price
In order to prove that Budweiser and Miller Genuine Draft are...
-
Price elasticity of demand for a product is likely to be
greater
the smaller the proportion of one`s incomes is spent on the
good
the greater the amount of time passes
the fewer the number of substitutes
if the product is a necessity rather than a luxury
The demands for such products as salt and electricity tend to
be:
perfectly price elastic.
relatively price inelastic.
relatively price elastic.
of unit price elasticity.
-
Suppose that the price elasticity of demand of a good is -3. Its
demand is _________ and the percentage change in its quantity
demanded is ________ than the percentage change in its price.
A. Elastic: Smaller
B. Elastic: Greater
C. Inelastic: Smaller
D. Inelastic: Greater
Which of the following is not a determinant of
the price elasticity of demand?
A. Availability of substitutes
B. Degree of necessity
C. Cost relative to income
D. Availability of inputs
With a(n) ______ demand,...
Refer to Figure 5-1. A perfectly elastic demand curve is shown
in
Panel D.
Panel A.
Panel C.
Panel B.
Refer to Figure 5-5. The data in the diagram indicates that
DVDs
are luxury goods.
are both luxury goods and price inelastic goods.
are price inelastic goods.
are both necessities and price inelastic goods.
are necessities.
3-
Consider the following pairs of items:
a. shampoo and conditioner
b. iPhones and earbuds
c. a laptop computer and a desktop computer
d....