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70.
Refer to Figure 20.2. If the area 0P1AB is less than the area 0P2CD, we can conclude that the price elasticity
of demand between point A and point C is
71.
Refer to Figure 20.2. Suppose the areas 0P1AB and 0P2CD are equal. We can conclude that the price
elasticity of demand between point A and point C is
72.
Refer to Figure 20.2. Comparing the price elasticity of demand at points A and C, we can say that
73. If the price of a good rises by 10 percent and quantity demanded falls by 20 percent, we can predict that
74. Cross-price elasticity refers to
A. How responsive consumers are to a change in price.
75. The formula for cross-price elasticity is
76. Suppose computer prices at an office supply store fall from $1,000 to $900 and as a result the quantity
demanded of typewriters decreases from 40 to 20 per month. The cross-price elasticity of demand is closest
to
A. 0.16.
77. Assume apples and oranges are substitutes. Suppose apple growers launch a successful advertising campaign
that convinces consumers apples are a better product. As a result the cross-price elasticity of apples and
oranges will become
78. MP3 players and MP3 files are complementary goods. The cross-price elasticity of demand between MP3
players and MP3 files is expected to be
A. Positive.
79. When the prices of postage stamps rise, the demand for Internet service increases, ceteris paribus.
Postage stamps and Internet service are therefore
80. Suppose the price of video games falls from $40 to $20 and as a result the quantity demanded of scooters falls
from 40,000 to 10,000 per year. The value of the cross-price elasticity of demand is
A. 1.80.
81. Suppose the price of soccer shoes decreases by 7 percent and as a result, there is a 12 percent rise in the
quantity of shin guards demanded. The value of the cross-price elasticity of demand is
82. If DVD players and DVDs are complementary goods, an increase in the price of DVDs will, ceteris paribus,
A. Increase the quantity demanded of DVDs.
83. If the cross-price elasticity of demand for SUVs with respect to the price of gasoline is -0.10, and
gasoline prices rise by 18 percent, then SUV sales should, ceteris paribus,
84. If two goods are complementary goods, then
A. The cross-price elasticity sign will be negative.
85. If two goods are substitute goods,
86. If the price of Coke rises by 5 percent and the sales of Pepsi go up by 10 percent, we can conclude that
A. The sign on the cross-price elasticity will be negative.
87. Income elasticity measures the
88. Which of the following is the best measure of the effects of a recession?
89. A good is normal if the sign on the income elasticity formula is
90.
When income falls, the demand for an inferior goods
91. Suppose the income elasticity of demand for used jet skis is 3.5. If the level of income decreases by 1
percent, the number of used jet skis sold will, ceteris paribus,
A. Rise by 0.29 percent.
92. If income falls 4 percent for a year and as a result the quantity of new homes demanded falls from 23 million
to 20 million units for the year, the value of the income elasticity of demand for new homes is closest to
A. 0.6.
93. Suppose income falls 5 percent in a year, and as a result, housing construction falls from 10 million to 5 million
units annually. Based on this information, housing starts are
94. Ceteris paribus, if income increases and as a result, the demand for good X increases and the demand
for good Y falls,
A. Good X is an inferior good and good Y is a normal good.
95. The demand for normal goods
96. If incomes fall by 5 percent and the quantity demanded for new cars falls by 10 percent,
A. New cars are a normal good, and the income elasticity is +.5.
97. If a good is normal, its
98. If a good is inferior, its
99. If income rises by 10 percent and the quantity sold of a particular vehicle falls by 7 percent, then this particular
type of vehicle is
A. A normal good.
112. Which of the following is most likely an inferior good?
101. Assume that store brand cereal is an inferior good. If income rises, then the price of store brand cereal will
________ and the quantity sold of store brand cereal will _______.
102. Elasticity of supply looks at
A. How responsive producers are to a change in quantity demanded.
103. The formula for the elasticity of supply is
A. The percentage change in quantity supplied divided by the percentage change in price.
104. Elasticity of supply tells us
A. How much sellers will increase production in response to a change in price.
105. Supply is very elastic when
106. Supply is very inelastic when
107. Oil and alternative sources of energy such as wind and solar are
108. Policy proposals to make the United States energy-independent
