Question

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 demand include:

Multiple Choice

a)cost relative to income, scope of demand, and adjustment time.

b)availability of complements, cost relative to income, and scope of market.

c)degree of necessity, cost relative to income, scope of market, and adjustment time.

d)availability of substitutes, cost relative to benefit, and scope of market.

29)The demand for shoes is ___________________ than is the demand for sneakers because __________________.

Multiple Choice

a)more price elastic; the scope of the market for shoes is more broadly defined

b)less price elastic; the scope of the market for shoes is less broadly defined

c)less price elastic; the scope of the market for shoes is more broadly defined

d)more price elastic; the scope of the market for shoes is less broadly defined

30)The demand for classical music is _______________ than is the demand for Beethoven's music because _______________.

Multiple Choice

a)less price elastic; the scope of the market for classical music is more broadly defined

b)more price elastic; classical music requires a smaller portion of one's income

c)less price elastic; classical music requires a smaller portion of one's income

d)more price elastic; the scope of the market for classical music is more broadly defined

31)An automobile manufacturing plant is likely to have a ______________ price elasticity of supply than a bread bakery due to _________________.

Multiple Choice

a)less elastic; a less flexible production process

b)more elastic; greater availability of inputs

c)more elastic; a more flexible production process

d)more elastic; lower availability of inputs

32)Elasticity along a demand curve:

Multiple Choice

a)changes when the demand curve is linear.

b)changes only when the demand curve is bowed in.

c)is constant if the demand curve is linear.

d)changes only when the demand curve is bowed out.

33)The concept of price elasticity can be applied to changes in:

Multiple Choice

a)quantity demanded, but not quantity supplied.

b)neither quantity supplied nor quantity demanded.

c)quantity supplied, but not quantity demanded.

d)both quantities supplied and quantity demanded.

34)Elasticities are used to measure responses to a change in:

Multiple Choice

a)income.

b)All are correct.

c)the price of a good.

d)the price of a related good.

35)Income elasticity will be positive for:

Multiple Choice

a)only necessities.

b)all inferior goods.

c)only luxury goods with substitutes.

d)all normal goods.

Answer 1