Question 1

If income elasticity for a particular good has a negative sign:

Accepted Answer

Any elasticity will have a negative sign if the directions of change are in the opposite directions,for example an increase in one leads to a decrease in the other.

Question 2

If you consume less of a good as your income increases:

Accepted Answer

Income elasticity is the percentage change in quantity consumed when there is a one percent change in income.For inferior goods,an increase in income leads to a decrease in consumption.

Question 3

In surveying their alumni,State U's economics department discovered that ramen noodle consumption declined as soon as students graduated and found jobs.One conclusion the survey team might draw from this result is that:

Accepted Answer

Income elasticity is the percentage change in quantity consumed when there is a one percent change in income.For inferior goods,an increase in income leads to a decrease in consumption.

Question 4

An increase in the price of golf clubs from $75 to $125 led to an increase in quantity supplied from 200 units to 300 units.The price elasticity of supply for golf club is _____ so the supply curve is _______.

Accepted Answer

Price elasticity of supply at a point is the percentage change in quantity supplied divided by the percentage change in price.

Question 5

During recessions,when some workers lose their jobs and have lower incomes,sales of durable goods (goods with a life expectancy of 3 years or more)decline.Apparently,durables are:

Accepted Answer

Income elasticity is the percentage change in quantity consumed when there is a one percent change in income.For normal goods,an increase in income leads to an increase in consumption.

Question 6

Elvis loves to eat peanut butter with bananas.Martha thinks the combination of peanut butter and bananas is repulsive.Therefore,economists would classify peanut butter and bananas as:

Accepted Answer

Cross-price elasticity for complements is negative.

Question 7

The cross-price elasticity for bread and potatoes is estimated to be 0.5.This implies bread and potatoes are:

Accepted Answer

Cross-price elasticity for substitutes is positive: a price increase of one will lead to an increase in demand for the other.

Question 8

If the price of plane tickets increased,more people might choose to travel by train.If this happened,you would know that:

Accepted Answer

Cross-price elasticity for substitutes is positive: a price increase of one will lead to an increase in demand for the other.

Question 9

Suppose that the price elasticity of supply for the Hope Diamond is zero.Therefore,the supply curve for the Hope Diamond is:

Accepted Answer

Supply is perfectly inelastic with respect to price if elasticity is zero.

Question 10

A cross-price elasticity of -1.2 indicates that the two goods under consideration are:

Accepted Answer

Cross-price elasticity for complements is negative: a price increase of one will lead to a decrease in demand for the other.

Question 11

A change in consumers' income levels:

Accepted Answer

Income changes shift demand curves.

Question 12

Suppose that each serving of Mac & Cheese costs exactly $0.50 to make no matter how many servings are produced.This means that the price elasticity of supply for Mac & Cheese is ______ and the supply is _______.

Accepted Answer

Supply is perfectly elastic with respect to price if elasticity of supply is infinite.

Question 13

If a one percent increase in the price of oranges leads to a five percent increase in the quantity supplied,the price elasticity of supply for oranges is ______.

Accepted Answer

Price elasticity of supply at a point is the percentage change in quantity supplied divided by the percentage change in price.

Question 14

An increase in the price of hamburger from $3 to $4 leads to an increase in quantity supplied from 100 units to 150 units.At the original price,the price elasticity of supply for hamburgers is _____ and at this point the supply curve is _______.

Accepted Answer

Price elasticity of supply at a point is the percentage change in quantity supplied divided by the percentage change in price.

Question 15

For which of the following products is income elasticity likely to be greatest?

Accepted Answer

People from all income levels buy salt,groceries and jeans.Wealthier people are likely to fly more often than are those with lower income.

Question 16

If most consumer goods and services are ______,then most income elasticities are ______.

Accepted Answer

Income elasticity is the percentage change in quantity consumed when there is a one percent change in income.For normal goods,an increase in income leads to an increase in consumption.

Question 17

Suppose you believe that plaid flannel shirts are an inferior good,and want to test this with economic data.You expect to find that the income elasticity for plaid flannel shirts is:

Accepted Answer

Income elasticity is the percentage change in quantity consumed when there is a one percent change in income.For inferior goods,an increase in income leads to a decrease in consumption.When the changes are in the opposite directions,the sign on elasticity is negative.

Question 18

The price elasticity of supply at a point is:

Accepted Answer

Price elasticity of supply at a point is the percentage change in quantity supplied divided by the percentage change in price.

Question 19

You have found data that indicates that the income elasticity of demand for generic (unbranded)shampoo is -0.7.You conclude that generic shampoo:

Accepted Answer

Income elasticity is the percentage change in quantity consumed when there is a one percent change in income.For inferior goods,an increase in income leads to a decrease in consumption.When the changes are in the opposite directions,the sign on elasticity is negative.

Question 20

The change in quantity supplied that results from a change in price is known as the:

Accepted Answer

Price elasticity of supply is the percentage change in quantity supplied that occurs in response to a 1 percent change in price.

Quiz 4: Elasticity

If income elasticity for a particular good has a negative sign:

If you consume less of a good as your income increases:

In surveying their alumni,State U's economics department discovered that ramen noodle consumption declined as soon as students graduated and found jobs.One conclusion the survey team might draw from this result is that:

An increase in the price of golf clubs from $75 to $125 led to an increase in quantity supplied from 200 units to 300 units.The price elasticity of supply for golf club is _ so the supply curve is ___.

During recessions,when some workers lose their jobs and have lower incomes,sales of durable goods (goods with a life expectancy of 3 years or more) decline.Apparently,durables are:

Elvis loves to eat peanut butter with bananas.Martha thinks the combination of peanut butter and bananas is repulsive.Therefore,economists would classify peanut butter and bananas as:

The cross-price elasticity for bread and potatoes is estimated to be 0.5.This implies bread and potatoes are:

If the price of plane tickets increased,more people might choose to travel by train.If this happened,you would know that:

Suppose that the price elasticity of supply for the Hope Diamond is zero.Therefore,the supply curve for the Hope Diamond is:

A cross-price elasticity of -1.2 indicates that the two goods under consideration are:

A change in consumers' income levels:

Suppose that each serving of Mac & Cheese costs exactly $0.50 to make no matter how many servings are produced.This means that the price elasticity of supply for Mac & Cheese is and the supply is _.

If a one percent increase in the price of oranges leads to a five percent increase in the quantity supplied,the price elasticity of supply for oranges is ______.

An increase in the price of hamburger from $3 to $4 leads to an increase in quantity supplied from 100 units to 150 units.At the original price,the price elasticity of supply for hamburgers is _ and at this point the supply curve is ___.

For which of the following products is income elasticity likely to be greatest?

If most consumer goods and services are ,then most income elasticities are .

Suppose you believe that plaid flannel shirts are an inferior good,and want to test this with economic data.You expect to find that the income elasticity for plaid flannel shirts is:

The price elasticity of supply at a point is:

You have found data that indicates that the income elasticity of demand for generic (unbranded) shampoo is -0.7.You conclude that generic shampoo:

The change in quantity supplied that results from a change in price is known as the: