Question 1

If the income elasticity of demand for noodles is -2 and the percentage change in the quantity consumed is 5 percent,what is the percentage change in income?

Accepted Answer

The income elasticity of demand is -2, which means that for every 1% increase in income, the quantity demanded for noodles decreases by 2%. The percentage change in the quantity consumed is 5%, so the percentage change in income is 5% / (-2) = -2.5%.

Question 2

Used car dealers find that their sales rise in a recession.We can be certain that consumers view used cars as

Accepted Answer

Used cars are considered inferior goods because their demand increases when consumer incomes decrease, such as during a recession.

Question 3

If the income elasticity of demand for good smartphone apps is 5 and the percentage change in income is 10 percent,what is the percentage change in the quantity consumed?

Accepted Answer

The percentage change in the quantity consumed can be calculated using the formula for income elasticity of demand: (Income Elasticity of Demand) = (% Change in Quantity Demanded) / (% Change in Income). Given an income elasticity of 5 and a 10 percent change in income, the calculation is: 5 = (% Change in Quantity Demanded) / 10%. Solving for % Change in Quantity Demanded gives 50%.

Question 4

When incomes fall by 20 percent,quantity demanded of specialty baked goods falls by 50 percent.Specialty baked goods are

Accepted Answer

Luxuries are goods for which demand increases more than proportionally as income rises, and decreases disproportionately when income falls. The significant drop in quantity demanded (50%) due to a smaller decrease in income (20%) suggests that specialty baked goods are considered luxuries, as people cut back on them significantly when their income decreases.

Question 5

If the income elasticity of demand for laptops is 3.5,you know that laptops are a(n)________ good.

Accepted Answer

The income elasticity of demand measures the percentage change in quantity demanded in response to a 1% change in income. A value greater than 1 indicates that the good is a luxury, meaning that as income increases, demand for the good will increase at a proportionally higher rate. Therefore, with a income elasticity of demand of 3.5, laptops are considered a luxury good.

Question 6

Howard buys 5 suits a year when he earns $70,000.When his income increases to $200,000,he buys 15 suits a year.From the midpoint method,his income elasticity of demand for suits is

Accepted Answer

The income elasticity of demand is calculated using the midpoint method as the percentage change in quantity demanded divided by the percentage change in income. Here, the change in quantity demanded is from 5 to 15 suits, and the change in income is from $70,000 to $200,000. Using the midpoint method, the income elasticity of demand is calculated as [(15 - 5) / ((15 + 5)/2)] / [($200,000 - $70,000) / (($200,000 + $70,000)/2)], which simplifies to 1.04.

Question 7

Refer to the information in the accompanying table.Without any calculations,we know that sushi is a(n)

Accepted Answer

Sushi has a positive income elasticity of demand, which means that as income increases, demand for sushi also increases. This is characteristic of a normal good.

Question 8

Shawna wins the lottery and her income increases by 60 percent.She used to buy 10 pints of cottage cheese per month and now she buys 12 pints.Her income elasticity of demand for cottage cheese is ________,making it a(n)________ good.

Accepted Answer

The income elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in income. Here, the quantity demanded of cottage cheese increases from 10 to 12 pints, a 20% increase (2/10 = 0.2 or 20%). Shawna's income increases by 60%. Therefore, the income elasticity of demand is 0.33 (20%/60%). An elasticity less than 1 indicates a necessity good, as the proportionate increase in quantity demanded is less than the proportionate increase in income.

Question 9

Income elasticity of demand for professional haircuts is found to be 1.7.This service is a

Accepted Answer

The income elasticity of demand for professional haircuts being 1.7 indicates that it is a normal good, as an increase in income leads to a more than proportionate increase in the quantity demanded. Additionally, as it is a personal grooming service, it can also be considered a luxury good as people may spend a significant amount on it to enhance their appearance.  Therefore, the correct choice is E - a normal good and a luxury good.

Question 10

If the income elasticity of demand is 0.5,the good will be a(n)________ good.

Accepted Answer

When the income elasticity of demand is positive but less than 1 (0 < elasticity < 1), it indicates that the good is a necessity. This means that as income increases, demand for the good increases, but at a slower rate than the increase in income.

Question 11

A shopping mall owner is given a list of income elasticity of demand values.Which one represents a necessity?

Accepted Answer

A necessity typically has an income elasticity of demand between 0 and 1, indicating that demand increases with income but at a slower rate. An elasticity of 0.5 fits this description.

Question 12

If the percentage change in the quantity consumed of pizza is 8 percent and the percentage change in income is 2 percent,what is the income elasticity of demand for pizza?

Accepted Answer

The income elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in income. Here, it is 8% / 2% = 4.

Question 13

Super Economy Brand products have an income elasticity of -1.4.Thus,these are ________ goods.

Accepted Answer

Inferior goods have a negative income elasticity of demand, meaning as income increases, demand for these goods decreases. The notation "F1F1F1S1uf02dF1F1F101.4" seems to be a formatting error, but if it implies a negative elasticity, then the correct answer is "inferior" goods.

Question 14

The income elasticity of demand for a good measures the responsiveness of ________ to a change in ________.

Accepted Answer

The income elasticity of demand measures how much the quantity demanded of a good changes in response to a change in income. Therefore, choice B is the correct answer.

Question 15

When her income falls from $50,000 to $20,000,Arianna increases her monthly purchase of hamburger from 20 pounds to 35 pounds.From the midpoint method,Arianna's income elasticity of demand for hamburgers is

Accepted Answer

The answer of When her income falls from $50,000 to...

Question 16

The responsiveness of demand to changes in income while holding the good's relative price constant is

Accepted Answer

The responsiveness of demand to changes in income while holding the good's relative price constant is called income elasticity of demand. It measures the percentage change in the quantity demanded of a good or service in response to a one percent change in income. The other options, such as slope of the demand curve, price elasticity of supply, and cross-price elasticity, do not directly capture the impact of changes in income on demand.

Question 17

A firm knows that Seneca's income elasticity of demand for hair ties is 5; for Janelle,it is 0.2.A firm can reason that a hair tie is a(n)________ good for Seneca while it is a(n)________ good for Janelle.

Accepted Answer

Income elasticity of demand measures how the quantity demanded of a good responds to a change in income. A good with an income elasticity greater than 1, like in Seneca's case (5), is considered a luxury good because demand increases more than proportionally as income increases. A good with an income elasticity between 0 and 1, like in Janelle's case (0.2), is considered a necessity because demand increases with income but less than proportionally.

Question 18

When Ruben starts working at his first full-time job out of college with a $60,000 salary,he is likely to buy more ________ and less ________.

Accepted Answer

With a higher income, Ruben is likely to increase his consumption of higher-quality, more expensive goods (like sushi) and decrease his consumption of lower-quality, cheaper goods (like canned tuna), reflecting a normal good consumption pattern.

Question 19

If the income elasticity of demand is -3,the good will be a(n)________ good.

Accepted Answer

A negative income elasticity of demand indicates that the good is an inferior good, meaning demand decreases as income increases.

Question 20

If the income elasticity of demand is 1.2,the good will be a(n)________ good.

Accepted Answer

A positive income elasticity of demand greater than 1 indicates that the good is a luxury, meaning that as income increases, demand for the good increases at a greater rate than income.

Quiz 4: Elasticity

If the income elasticity of demand for noodles is -2 and the percentage change in the quantity consumed is 5 percent,what is the percentage change in income?

Used car dealers find that their sales rise in a recession.We can be certain that consumers view used cars as

If the income elasticity of demand for good smartphone apps is 5 and the percentage change in income is 10 percent,what is the percentage change in the quantity consumed?

When incomes fall by 20 percent,quantity demanded of specialty baked goods falls by 50 percent.Specialty baked goods are

If the income elasticity of demand for laptops is 3.5,you know that laptops are a(n) ________ good.

Howard buys 5 suits a year when he earns $70,000.When his income increases to $200,000,he buys 15 suits a year.From the midpoint method,his income elasticity of demand for suits is

Refer to the information in the accompanying table.Without any calculations,we know that sushi is a(n)

Shawna wins the lottery and her income increases by 60 percent.She used to buy 10 pints of cottage cheese per month and now she buys 12 pints.Her income elasticity of demand for cottage cheese is ,making it a(n) good.

Income elasticity of demand for professional haircuts is found to be 1.7.This service is a

If the income elasticity of demand is 0.5,the good will be a(n) ________ good.

A shopping mall owner is given a list of income elasticity of demand values.Which one represents a necessity?

If the percentage change in the quantity consumed of pizza is 8 percent and the percentage change in income is 2 percent,what is the income elasticity of demand for pizza?

Super Economy Brand products have an income elasticity of -1.4.Thus,these are ________ goods.

The income elasticity of demand for a good measures the responsiveness of to a change in .

When her income falls from $50,000 to $20,000,Arianna increases her monthly purchase of hamburger from 20 pounds to 35 pounds.From the midpoint method,Arianna's income elasticity of demand for hamburgers is

The responsiveness of demand to changes in income while holding the good's relative price constant is

A firm knows that Seneca's income elasticity of demand for hair ties is 5; for Janelle,it is 0.2.A firm can reason that a hair tie is a(n) good for Seneca while it is a(n) good for Janelle.

When Ruben starts working at his first full-time job out of college with a $60,000 salary,he is likely to buy more and less .

If the income elasticity of demand is -3,the good will be a(n) ________ good.

If the income elasticity of demand is 1.2,the good will be a(n) ________ good.

Quiz 4: Elasticity

If the income elasticity of demand for noodles is -2 and the percentage change in the quantity consumed is 5 percent,what is the percentage change in income?

Used car dealers find that their sales rise in a recession.We can be certain that consumers view used cars as

If the income elasticity of demand for good smartphone apps is 5 and the percentage change in income is 10 percent,what is the percentage change in the quantity consumed?

When incomes fall by 20 percent,quantity demanded of specialty baked goods falls by 50 percent.Specialty baked goods are

If the income elasticity of demand for laptops is 3.5,you know that laptops are a(n) ________ good.

Howard buys 5 suits a year when he earns $70,000.When his income increases to $200,000,he buys 15 suits a year.From the midpoint method,his income elasticity of demand for suits is

Refer to the information in the accompanying table.Without any calculations,we know that sushi is a(n)

Shawna wins the lottery and her income increases by 60 percent.She used to buy 10 pints of cottage cheese per month and now she buys 12 pints.Her income elasticity of demand for cottage cheese is ________,making it a(n) ________ good.

Income elasticity of demand for professional haircuts is found to be 1.7.This service is a

If the income elasticity of demand is 0.5,the good will be a(n) ________ good.

A shopping mall owner is given a list of income elasticity of demand values.Which one represents a necessity?

If the percentage change in the quantity consumed of pizza is 8 percent and the percentage change in income is 2 percent,what is the income elasticity of demand for pizza?

Super Economy Brand products have an income elasticity of -1.4.Thus,these are ________ goods.

The income elasticity of demand for a good measures the responsiveness of ________ to a change in ________.

When her income falls from $50,000 to $20,000,Arianna increases her monthly purchase of hamburger from 20 pounds to 35 pounds.From the midpoint method,Arianna's income elasticity of demand for hamburgers is

The responsiveness of demand to changes in income while holding the good's relative price constant is

A firm knows that Seneca's income elasticity of demand for hair ties is 5; for Janelle,it is 0.2.A firm can reason that a hair tie is a(n) ________ good for Seneca while it is a(n) ________ good for Janelle.

When Ruben starts working at his first full-time job out of college with a $60,000 salary,he is likely to buy more ________ and less ________.

If the income elasticity of demand is -3,the good will be a(n) ________ good.

If the income elasticity of demand is 1.2,the good will be a(n) ________ good.

Shawna wins the lottery and her income increases by 60 percent.She used to buy 10 pints of cottage cheese per month and now she buys 12 pints.Her income elasticity of demand for cottage cheese is ,making it a(n) good.

The income elasticity of demand for a good measures the responsiveness of to a change in .

A firm knows that Seneca's income elasticity of demand for hair ties is 5; for Janelle,it is 0.2.A firm can reason that a hair tie is a(n) good for Seneca while it is a(n) good for Janelle.

When Ruben starts working at his first full-time job out of college with a $60,000 salary,he is likely to buy more and less .