Economics Chapter 6 Multiple Choice The Income

Suppose the cross–price elasticity of demand for butter and margarine is equal to

0.96 but the cross price elasticity for water and lemons is –0.13. This means that

butter and margarine are ________ while water and lemons are ________.

Answer complements; substitutes

194. Multiple Choice: Suppose the cross-price elasticity be…

Question Suppose the cross–price elasticity between demand for Burger King burgers and

the price of McDonald’s burgers is 0.8. If McDonald’s increases the price of its

burgers by 10%, then:

Answer Burger King will sell 10% more burgers.

195. Multiple Choice: Suppose the price of cereal rose by 2...

Question Suppose the price of cereal rose by 25% and the quantity of milk sold decreased

by 50%. We know that the:

cross–price elasticity of demand for milk is 2.

196. Multiple Choice: If two goods are substitutes, their c...

Question If two goods are substitutes, their cross-price elasticity of demand should be:

Answer less than 0.

Points: 0

197. Multiple Choice: If two goods are complements, their c...

Question If two goods are complements, their cross–price elasticity of demand should be:

198. Multiple Choice: If the price of chocolate-covered pea…

Question If the price of chocolate-covered peanuts increases and the demand for strawberry

licorice twists increases, this indicates that these two goods are:

Answer complementary goods.

199. Multiple Choice: The pair of items that is likely to h…

Question The pair of items that is likely to have the largest positive cross–price elasticity of

demand is:

200. Multiple Choice: The cross-price elasticity of demand ...

Question The cross-price elasticity of demand of complementary goods is:

Points: 0

201. Multiple Choice: If the price of chocolate-covered pea…

Question If the price of chocolate-covered peanuts increases and the demand for strawberry–

flavored soft drinks decreases, this indicates that these two goods are:

Answer unrelated goods.

202. Multiple Choice: The pair of items that is most likely...

Question The pair of items that is most likely to have a negative cross–price elasticity of

demand is:

Answer aspirin and hamburgers.

203. Multiple Choice: If your purchases of shoes increase f…

Question If your purchases of shoes increase from 9 pairs per year to 11 pairs per year when

the price of shirts increases from $8 to $12, for you, shoes and shirts are

considered:

Answer inferior goods.

Points: 0

204. Multiple Choice: If your purchases of shoes decrease f...

Question If your purchases of shoes decrease from 11 pairs per year to 9 pairs per year

when the price of shirts increases from $8 to $12, for you, shoes and shirts are

considered:

Answer inferior goods.

205. Multiple Choice: If your purchases of shoes remain con...

Question If your purchases of shoes remain constant at 9 pairs per year when the price of

shirts increases from $8 to $12, for you, shoes and shirts are considered:

Answer inferior goods.

206. Multiple Choice: The cross-price elasticity of demand ...

Question The cross-price elasticity of demand for Coke with respect to the price of Pepsi has

been estimated to be 0.61. If the price of Pepsi falls by 10% in a period, how will

that affect the demand for Coke in that period, all other things unchanged?

Answer The demand for Coke will decrease but by less than 6.1%.

207. Multiple Choice: Suppose that the cross-price elastici…

Points: 0

Question Suppose that the cross-price elasticity of demand for Mountain Dew with respect to

the price of Coke is 0.7. This implies that the two goods are:

normal.

208. Multiple Choice: Which of the following pairs of goods...

Question Which of the following pairs of goods are most likely to have a cross–price elasticity

of demand that is greater than zero?

Answer shoes and shoelaces

209. Multiple Choice: If you know the cross-price elasticit...

Question If you know the cross–price elasticity between two goods is positive, then you know

the two goods are:

210. Multiple Choice: Raina consumes 100% more mechanical p...

Question Raina consumes 100% more mechanical pencils when the price of felt-tip pens

increases by 50%. For Raina, pencils and pens are ________, and the cross–price

elasticity of demand is ________.

Answer complements; 1/2

Points: 0

211. Multiple Choice: Goods are ________ when the cross-pri...

Question Goods are ________ when the cross–price elasticity of demand is positive and

inelastic; elastic

212. Multiple Choice: The percentage change in quantity dem...

Question The percentage change in quantity demanded of one good or service divided by the

percentage change in the price of a related good or service is the:

Answer price elasticity of demand.

213. Multiple Choice: If two goods are substitutes, their c...

Question If two goods are substitutes, their cross-price elasticity of demand should be:

Answer less than 0.

214. Multiple Choice: If two goods are complements, their c...

Points: 0

Question If two goods are complements, their cross–price elasticity of demand should be:

greater than 0.

215. Multiple Choice: The cross-price elasticity of demand ...

Question The cross-price elasticity of demand of substitute goods is:

Answer between –1 and 0.

216. Multiple Choice: Since the price of walnuts increases ...

Question Since the price of walnuts increases as the demand for cashews increases, we

can assume that these two goods are:

Answer unrelated goods.

217. Multiple Choice: The pair of items that is likely to h…

Question The pair of items that is likely to have the highest cross-price elasticity of demand

is:

Answer baseball and baseball glove.

Points: 0

218. Multiple Choice: If two goods are complementary, we ca...

Question If two goods are complementary, we can assume that the cross-price elasticity of

demand for these goods is:

Answer between 0 and 1.

219. Multiple Choice: We note that the price of pretzels in...

Question We note that the price of pretzels increases and the demand for tortilla chips

decreases, so we can assume that these two goods are:

Answer unrelated goods.

220. Multiple Choice: The pair of items that is most likely...

Question The pair of items that is most likely to have a negative cross–price elasticity of

demand is:

Answer cashews and peanuts.

221. Multiple Choice: The percent change in quantity demand...

Question The percent change in quantity demanded divided by the percent change in

income, all other things unchanged, is:

Points: 0

Answer price elasticity of demand.

222. Multiple Choice: If the income elasticity of demand fo...

Question If the income elasticity of demand for a good is positive, the good is said to be:

Answer an inferior good.

223. Multiple Choice: The income elasticity of demand of a …

Question The income elasticity of demand of a normal good is:

Answer between 1 and 0.

224. Multiple Choice: If your income increases and your con...

Question If your income increases and your consumption of bagels increases, other things

equal, bagels are considered:

Answer a negative good.

Points: 0

225. Multiple Choice: If the income elasticity of demand fo...

Question If the income elasticity of demand for a good is negative, the good is said to be:

a normal good.

226. Multiple Choice: If your purchases of shoes increase f…

Question If your purchases of shoes increase from 9 pairs per year to 11 pairs per year when

your income increases from $19,000 to $21,000 a year, other things equal, for you,

shoes are considered:

a substitute good.

227. Multiple Choice: If your purchases of shoes decrease f...

Question If your purchases of shoes decrease from 11 pairs per year to 9 pairs per year

when your income increases from $19,000 to $21,000 a year, other things equal,

then, for you, shoes are considered:

Answer a normal good.

228. Multiple Choice: The income elasticity of demand for p...

Question The income elasticity of demand for peaches has been estimated to be 1.43. If

income grows by 15% in a period, how will that affect total revenue from peaches in

that period, all other things unchanged?

Points: 0

229. Multiple Choice: The income elasticity of demand for e…

Question The income elasticity of demand for eggs has been estimated to be 0.57. If income

grows by 5% in a period, how will that affect demand for eggs in that period, all

other things unchanged?

Answer Demand will increase by more than 5.7%.

230. Multiple Choice: Eric‘s income increased from $40,000 ...

Question Eric‘s income increased from $40,000 to $50,000 per year. Eric‘s consumption of

tickets to pro football games increased from two to four per year. Using the

midpoint formula, his income elasticity of demand for pro football game tickets is

equal to ________, and football game tickets are ________ goods.

Answer –1/3; inferior

231. Multiple Choice: Nico rents 10% more DVDs when his inc...

Question Nico rents 10% more DVDs when his income increases by 20%. Based on this

information, we know that:

Points: 0

the price of DVDs has decreased.

232. Multiple Choice: If I told you that the income elastic…

Question If I told you that the income elasticity for hybrid cars was positive, you would know

that:

Answer there are many substitutes for hybrid cars.

233. Multiple Choice: Kayla and Jada are roommates in New Y...

Question Kayla and Jada are roommates in New York City. Both Kayla and Jada recently

received raises. Kayla now buys more CDs than before, but Jada buys fewer. Kayla

behaves as if CDs are ________ goods, and Jada’s income elasticity of demand for

CDs is ________.

Answer normal; positive

234. Multiple Choice: When Joe‘s income is $100 per week, h...

Question When Joe‘s income is $100 per week, he spends $20 per week on pizza. When his

income rises to $110 per week, he spends $25 per week on pizza. If the price of

pizza remains constant, this information implies that for Joe:

demand for pizza is price-elastic.

Points: 0

235. Multiple Choice: Suppose you manage a convenience mart…

Question Suppose you manage a convenience mart and are in charge of ordering products

but do not set the price. The home office provides the prices. In your area, the

income elasticity of demand for peanut butter is –0.5. Due to local factory closings,

you expect local incomes to decrease by 20% on average in the next month. As a

result, you should stock:

Answer 20% more peanut butter on the shelves.

236. Multiple Choice: Reference: Ref 6-16 (Table: Market f...

Question

Reference: Ref 6-16

(Table: Market for Pizza) Look at the table Market for Pizza. In the table, when

income changes from $1,000 to $1,400 per month, the income elasticity of demand

for pizza at a price of $14 per pizza is:

Answer –1.

237. Multiple Choice: Reference: Ref 6-16 (Table: Market f...

Question

Points: 0

Reference: Ref 6-16

(Table: Market for Pizza) If income changes from $1,000 to $1,400 per month, the

income elasticity of demand at a price of $10 per pizza is:

0.40

238. Multiple Choice: Reference: Ref 6-16 (Table: Market f...

Question

Reference: Ref 6-16

(Table: Market for Pizza) If income changes from $1,000 to $1,400 per month, the

income elasticity of demand at a price of $10 per pizza is:

Answer 0.33

Points: 0

239. Multiple Choice: Which of the following statements is ...

Question Which of the following statements is true?

Answer When the income elasticity of demand is positive, the good is an inferior good.

240. Multiple Choice: If the income elasticity of demand fo...

Question If the income elasticity of demand for a good is _______, the good is said to be

_________.

Answer positive; inferior good

241. Multiple Choice: For a good to be considered a normal ...

Question For a good to be considered a normal good, the_____ must be ________.

Answer income elasticity of demand; between 1 and 0

Points: 0

242. Multiple Choice: If your income increases and your con...

Question If your income increases and your consumption of a good increases, then, for you,

that good is considered:

Answer a negative good.

243. Multiple Choice: If the income elasticity of demand fo...

Question If the income elasticity of demand for a good is _______, the good is said to be

_________.

negative; a normal good

244. Multiple Choice: The income elasticity of demand of an…

Question The income elasticity of demand of an inferior good:

cannot be determined.

245. Multiple Choice: Assume that as your income increases,...

Question Assume that as your income increases, your consumption of burgers increases.

We can assume that you consider burgers:

Answer a negative good.

Points: 0

246. Multiple Choice: If the consumption of a certain good ...

Question If the consumption of a certain good increases when income decreases, that good

is considered:

Answer a substitute good.

247. Multiple Choice: The income elasticity of demand measu...

Question The income elasticity of demand measures:

Answer how much the quantity demanded changes in response to a price change.

248. Multiple Choice: If an increase in income leads to a d...

Question If an increase in income leads to a decrease in the demand for a good, then the

good is said to be:

Answer normal.

249. Multiple Choice: If an increase in income leads to an ...

Question

Points: 0

If an increase in income leads to an increase in the demand for a good, then the

good is said to be:

a staple or necessity.

250. Multiple Choice: For a normal good, the income elastic...

Question For a normal good, the income elasticity of demand will be:

Answer negative.

251. Multiple Choice: For an inferior good, the income elas...

Question For an inferior good, the income elasticity of demand will be:

determined by the direction of the change in income.

252. Multiple Choice: Reference: Ref 6-17 (Table: Johnson’...

Question

Reference: Ref 6-17

(Table: Johnson‘s Income and Expenditures) Look at the table Johnson’s Income

and Expenditures. Johnson’s income elasticity of demand for steaks is:

Points: 0

Answer greater than 1.

253. Multiple Choice: Reference: Ref 6-17 (Table: Johnson’...

Question

Reference: Ref 6-17

(Table: Johnson‘s Income and Expenditures) Look again at the table Johnson’s

Income and Expenditures. Johnson’s income elasticity of demand for magazines

is:

Answer negative.

254. Multiple Choice: Reference: Ref 6-17 (Table: Johnson’...

Question

Reference: Ref 6-17

(Table: Johnson‘s Income and Expenditures) Look again at the table Johnson’s

Income and Expenditures. For Johnson, magazines are:

Answer a negative good.

Points: 0

a neutral good.

255. Multiple Choice: Reference: Ref 6-17 (Table: Johnson’...

Question

Reference: Ref 6-17

(Table: Johnson‘s Income and Expenditures) Look again at the table Johnson’s

Income and Expenditures. Johnson’s income elasticity of demand for movies is:

Answer infinite.

256. Multiple Choice: Reference: Ref 6-17 (Table: Johnson’...

Question

Reference: Ref 6-17

(Table: Johnson‘s Income and Expenditures) Look at the table Johnson’s Income

and Expenditures. Johnson’s income elasticity of demand for pizzas is:

Answer –1.4.

257. Multiple Choice: Reference: Ref 6-17 (Table: Johnson’...

Points: 0