Question 1

If your income increases and your consumption of bagels increases,other things equal,bagels are considered a(n)_____ good.
A)negative
B)positive
C)inferior
D)normal

Accepted Answer

Bagels are considered a normal good because as income increases, the demand for bagels also increases. This indicates that bagels are a product that consumers see as desirable and are willing to purchase more of as their income allows.

Question 2

Use the following to answer question: 
-(Figure: The Demand for e-Books)If the price of e-Books decreases from $6 to $4,total revenue _____,which means that demand is _____.
A)changes from $60 to $90;elastic
B)remains constant;unit-elastic
C)changes from $240 to $360;elastic
D)changes from $40 to $50;inelastic

Accepted Answer

The answer of Use the following to answer question: 
-(Figure:...

Question 3

Use the following to answer question: 
-(Figure: The Demand Curve)Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $8 and $9 is approximately:
A)0.18.
B)0.56.
C)1.80.
D)5.67.

Accepted Answer

The answer of Use the following to answer question: 
-(Figure:...

Question 4

If the income elasticity of demand for a good is negative,the good is said to be:
A)inferior.
B)negative.
C)positive.
D)normal.

Accepted Answer

A negative income elasticity of demand indicates that as income increases, the demand for the good decreases. This is characteristic of inferior goods, which are goods that consumers buy less of as their income increases and they are able to afford better quality goods.

Question 5

Suppose you manage a convenience mart and are in charge of ordering products,but the home office sets the prices.In your area,the income elasticity of demand for peanut butter is -0.5.Because of local factory closings,you expect local incomes to decrease by 20% on average in the next month.As a result,you should stock _____ peanut butter.
A)20% more
B)5% more
C)10% more
D)10% less

Accepted Answer

The answer of Suppose you manage a convenience mart and...

Question 6

The income elasticity of demand of a normal good is always:
A)greater than 0.
B)less than 0.
C)equal to 0.
D)impossible to determine without more information about the type of good in question.

Accepted Answer

By definition, normal goods are those products or services for which the demand increases as income rises. Therefore, the income elasticity of demand for normal goods is always greater than zero.

Question 7

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 remained constant during this time,this information implies that,for Joe:
A)pizza is a normal good.
B)pizza is an inferior good.
C)pizza is a substitute good.
D)demand for pizza is price-elastic.

Accepted Answer

As Joe's income increases, he chooses to buy more pizza, indicating that pizza is a normal good for him. If pizza were an inferior good, Joe would buy less of it as his income increases. The information provided does not give any indication of whether pizza is a substitute good or whether the demand for pizza is price-elastic.

Question 8

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.By the midpoint formula,his income elasticity of demand for pro football game tickets is equal to _____,and football game tickets are _____ goods.
A)-0.33;inferior
B)+0.67;normal
C)-3;inferior
D)+3;normal

Accepted Answer

The income elasticity of demand is calculated using the midpoint formula: [(Q2 - Q1) / ((Q2 + Q1) / 2)] / [(I2 - I1) / ((I2 + I1) / 2)]. Substituting the values: [(4 - 2) / (4 + 2) / 2] / [(50000 - 40000) / (50000 + 40000) / 2] = 3. Since the elasticity is positive and greater than 1, tickets are normal goods.

Question 9

Use the following to answer question: 
-(Figure: The Demand for e-Books)Use Figure: The Demand for e-Books.The demand schedule _____ when the price increases from $4 to $6 _____ when it increases from $6 to $8.
A)is less elastic;than
B)is more elastic;than
C)has the same elasticity;as
D)is unit-elastic;and

Accepted Answer

As we move along the demand curve from point A to point B, the slope (or elasticity) decreases, indicating that the demand is becoming less responsive to price changes. Therefore, the demand schedule is less elastic when the price increases from $4 to $6. Similarly, as we move along the demand curve from point C to point D, the slope (or elasticity) increases, indicating that the demand is becoming more responsive to price changes. Therefore, the demand schedule is more elastic when the price increases from $6 to $8.

Question 10

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,for you,shoes are considered a(n)_____ good.
A)normal
B)inferior
C)complementary
D)substitute

Accepted Answer

An inferior good is one where the quantity demanded decreases as income increases. In this case, as the income increases from $19,000 to $21,000, the quantity demanded of shoes decreases from 11 pairs to 9 pairs, indicating that shoes are an inferior good for this individual.

Question 11

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(n)_____ good.
A)normal
B)inferior
C)complementary
D)substitute

Accepted Answer

A normal good is a good for which demand increases as income increases. In this case, as your income increases, your demand for shoes also increases, indicating that shoes are a normal good for you.

Question 12

Nico rents 10% more DVDs when his income increases by 20%.Based on this information,we know that DVDs:
A)are a normal good.
B)are an inferior good.
C)have many substitutes.
D)have come down in price.

Accepted Answer

If Nico rents 10% more DVDs when his income increases by 20%, this means that the demand for DVDs increases as income increases. This is characteristic of normal goods, where there is a positive relationship between income and demand for the good. Therefore, DVDs are a normal good.

Question 13

Use the following to answer question: 
-(Figure: The Demand Curve)Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $1 and $2 is approximately:
A)0.18.
B)0.56.
C)1.80.
D)5.67.

Accepted Answer

The midpoint method for calculating price elasticity of demand is:(Q2 - Q1) / ((Q2 + Q1) / 2) / (P2 - P1) / ((P2 + P1) / 2)Plugging in the values from the graph, we get:(10 - 20) / ((10 + 20) / 2) / (2 - 1) / ((2 + 1) / 2) = -0.18

Question 14

Use the following to answer question: 
-(Figure: The Demand for e-Books)If the price of e-Books increases from $6 to $8,total revenue _____,which means that demand is _____.
A)increases;elastic
B)decreases;inelastic
C)remains constant;elastic
D)decreases;elastic

Accepted Answer

According to the law of demand, when the price of a good increases, the quantity demanded decreases. In this case, if the price of e-Books increases from $6 to $8, the total revenue will decrease. This indicates that demand is elastic, as a small change in price leads to a proportionally larger change in the quantity demanded. Therefore, the correct answer is D.

Question 15

Kayla and Jada are roommates in New York City.Both Kayla and Jada recently received raises.Kayla now purchases more mp3 albums online than before,but Jada buys fewer.Kayla behaves as if mp3 albums are _____ goods,and Jada's income elasticity of demand for mp3 albums is _____.
A)normal;positive
B)normal;negative
C)inferior;positive
D)inferior;negative

Accepted Answer

The answer of Kayla and Jada are roommates in New...

Question 16

If the income elasticity for hybrid cars is positive:
A)there are many substitutes for hybrid cars.
B)there are few substitutes for hybrid cars.
C)hybrid cars are a normal good.
D)hybrid cars are an inferior good.

Accepted Answer

A positive income elasticity means that as income increases, demand for hybrid cars increases. This indicates that hybrid cars are a normal good, meaning they are a product that people buy more of as their income increases.

Question 17

The income elasticity of demand for peaches has been estimated to be 1.43.If income grows by 15%,all other things unchanged,total revenue will:
A)rise.
B)fall.
C)remain unchanged.
D)The information is insufficient to answer the question.

Accepted Answer

The income elasticity of demand for peaches being 1.43 indicates that peaches are a normal good (as income and demand move in the same direction). 
If income grows by 15%, the quantity of peaches demanded will increase as people have more purchasing power. 
Since the income elasticity is greater than 1, the percentage increase in quantity demanded will be greater than the percentage increase in income. 
Therefore, total revenue will increase, as the increase in quantity demanded will more than offset the decrease in the price of peaches due to an increase in supply.

Question 18

The income elasticity of demand for eggs has been estimated to be 0.57.If income grows by 5% in a period,all other things unchanged,demand will:
A)increase by more than 5.7%.
B)increase by about 2.9%.
C)decrease by more than 5.7%.
D)decrease by less than 5.7%.

Accepted Answer

The income elasticity of demand for eggs is 0.57, which means that for a 1% increase in income, demand for eggs increases by 0.57%. If income grows by 5%, demand for eggs will increase by 5% x 0.57 = 2.85%, or about 2.9%. Therefore, the correct answer is B.

Question 19

Use the following to answer question: 
-(Figure: The Demand for e-Books)Use Figure: The Demand for e-Books.What is the price elasticity of demand (by the midpoint method)when the price decreases from $6 to $4?
A)0.55
B)0.5
C)1
D)0.67

Accepted Answer

The price elasticity of demand using the midpoint method is calculated as the percentage change in quantity demanded divided by the percentage change in price. When the price decreases from $6 to $4, the quantity demanded increases from 4 to 6. The formula for the midpoint method is [(Q2 - Q1) / ((Q2 + Q1)/2)] / [(P2 - P1) / ((P2 + P1)/2)]. Plugging in the values: [(6 - 4) / ((6 + 4)/2)] / [(4 - 6) / ((4 + 6)/2)] = (2/5) / (-2/5) = -1. The absolute value is taken for elasticity, so it is 1.

Question 20

Use the following to answer question: 
-(Figure: The Demand for e-Books)Use Figure: The Demand for e-Books.What is the price elasticity of demand (by the midpoint method)when the price increases from $6 to $8?
A)0.55
B)0.5
C)2.33
D)0.67

Accepted Answer

The formula for calculating price elasticity of demand by the midpoint method is [(Q2 - Q1)/((Q1 + Q2)/2)] / [(P2 - P1)/((P1 + P2)/2)]. Using the values from the graph, we get [(60 - 90)/((60 + 90)/2)] / [(8 - 6)/((8 + 6)/2)] = -1.5 / 0.16667 = -9. Then we take the absolute value and get 9. Therefore, the price elasticity of demand is 9. However, we need to round to the nearest integer, so it is 9 rounded to 2 decimal places. Thus, the price elasticity of demand (by the midpoint method) when the price increases from $6 to $8 is 2.33.

Quiz 6: Elasticity

If your income increases and your consumption of bagels increases,other things equal,bagels are considered a(n) _____ good.

Use the following to answer question: -(Figure: The Demand for e-Books) If the price of e-Books decreases from $6 to $4,total revenue _,which means that demand is _.

Use the following to answer question: -(Figure: The Demand Curve) Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $8 and $9 is approximately:

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

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

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 remained constant during this time,this information implies that,for Joe:

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.By the midpoint formula,his income elasticity of demand for pro football game tickets is equal to _,and football game tickets are _ goods.

Use the following to answer question: -(Figure: The Demand for e-Books) Use Figure: The Demand for e-Books.The demand schedule _ when the price increases from $4 to $6 _ when it increases from $6 to $8.

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,for you,shoes are considered a(n) _____ good.

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(n) _____ good.

Nico rents 10% more DVDs when his income increases by 20%.Based on this information,we know that DVDs:

Use the following to answer question: -(Figure: The Demand Curve) Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $1 and $2 is approximately:

Use the following to answer question: -(Figure: The Demand for e-Books) If the price of e-Books increases from $6 to $8,total revenue _,which means that demand is _.

Kayla and Jada are roommates in New York City.Both Kayla and Jada recently received raises.Kayla now purchases more mp3 albums online than before,but Jada buys fewer.Kayla behaves as if mp3 albums are _ goods,and Jada's income elasticity of demand for mp3 albums is _.

If the income elasticity for hybrid cars is positive:

The income elasticity of demand for peaches has been estimated to be 1.43.If income grows by 15%,all other things unchanged,total revenue will:

The income elasticity of demand for eggs has been estimated to be 0.57.If income grows by 5% in a period,all other things unchanged,demand will:

Use the following to answer question: -(Figure: The Demand for e-Books) Use Figure: The Demand for e-Books.What is the price elasticity of demand (by the midpoint method) when the price decreases from $6 to $4?

Use the following to answer question: -(Figure: The Demand for e-Books) Use Figure: The Demand for e-Books.What is the price elasticity of demand (by the midpoint method) when the price increases from $6 to $8?