Question 1

The cross-price elasticity between Gillette razors and a related good is -3.4.What happens to the demand for the related good if the price of Gillette razors falls by 10 percent?
A)The quantity demanded of the related good rises by 3.4 percent.
B)The quantity demanded of the related good falls by 34 percent.
C)The quantity demanded of the related good rises by 34 percent.
D)The quantity demanded of the related good falls by 3.4 percent.

Accepted Answer

The negative sign of the cross-price elasticity indicates that Gillette razors and the related good are complements. When the price of Gillette razors falls by 10%, the demand for Gillette razors will increase. Due to the complementarity of the goods, the demand for the related good will also increase. The magnitude of the increase in the demand for the related good will be proportional to the cross-price elasticity, which in this case is 3.4. Therefore, the demand for the related good will rise by 34%.

Question 2

In order to prove that Motrin and Ibuprofen are substitutes,one should measure the ________ and get a ________.
A)cross-price elasticity;positive number
B)cross-price elasticity;negative number
C)price elasticity of demand;number greater than 1 (in absolute value)
D)price elasticity of demand;number less than 1 (in absolute value)

Accepted Answer

To prove that Motrin and Ibuprofen are substitutes, we need to measure the cross-price elasticity between the two products. Cross-price elasticity measures the responsiveness of the quantity demanded of one product to a change in the price of another product. If the cross-price elasticity between Motrin and Ibuprofen is positive, it means that they are substitutes, as an increase in the price of one will result in an increase in the demand for the other. Therefore, choice A is the best answer.

Question 3

During an economic expansion as consumer incomes rise,holding everything else constant
A)the demand for most goods,except luxuries,will rise.
B)the demand for luxuries will rise while the demand for inferior goods will fall.
C)the demand for luxuries and inferior goods will rise.
D)the prices of luxuries will fall while the prices of inferior goods will rise.

Accepted Answer

The answer of During an economic expansion as consumer incomes...

Question 4

Economists have estimated that the cross-price elasticity of demand between beer and spirits is -0.50,the income elasticity for spirits is 1.21 and the income elasticity for wine is 5.03.These elasticities mean that beer and spirits are ________,and spirits and wine are ________.
A)complements;luxuries
B)normal goods;luxuries
C)complements;substitutes
D)substitutes;luxuries

Accepted Answer

The answer of Economists have estimated that the cross-price elasticity...

Question 5

In the alcohol industry,both wine and spirits are considered to be substitutes for beer.

Accepted Answer

The answer of In the alcohol industry,both wine and spirits...

Question 6

A recent study indicated that "Stricter college alcohol policies such as raising the price of alcohol,or banning alcohol on campus,decreases the number of students who use marijuana." This indicates that the cross-price elasticity between alcohol and marijuana is positive.

Accepted Answer

The answer of A recent study indicated that "Stricter college...

Question 7

If the income elasticity for canned food is 0.8,then canned food is an inferior good.

Accepted Answer

A positive income elasticity greater than 1 indicates a normal good, while a positive income elasticity less than 1 indicates an inferior good. In this case, the income elasticity of canned food is positive but less than 1, indicating that it is a normal good, not an inferior good.

Question 8

Demand for staples such as dairy products and bread is likely to be both income and price inelastic.

Accepted Answer

Staples such as dairy products and bread are basic necessities that people tend to purchase regardless of changes in their income or the price of the product. Hence, the demand for these products is likely to be both income and price inelastic.

Question 9

Economists estimated that the cross-price elasticity of demand for beer and wine is -0.83 and the income elasticity of wine is 5.03.This means that
A)beer and wine are substitutes and wine is an inferior good.
B)beer and wine are complements and wine is a luxury good.
C)beer and wine are substitutes and wine is a luxury good.
D)beer and wine are complements and wine is an inferior good.

Accepted Answer

The answer of Economists estimated that the cross-price elasticity of...

Question 10

Which of the following pairs of goods is likely to have a negative cross-price elasticity of demand?
A)pancakes and syrup
B)hot dogs and hamburgers
C)orange juice and grapefruit juice
D)peanuts and cat food

Accepted Answer

The answer of Which of the following pairs of goods...

Question 11

The absolute value of the price elasticity of demand for telescopes is 1.5.Therefore,telescopes can be classified as a luxury.

Accepted Answer

The answer of The absolute value of the price elasticity...

Question 12

When the price of tortilla chips rose by 10 percent,the quantity of tortilla chips sold fell 4 percent,and the sale of dips (like salsa and bean dip)fell 8 percent.This set of facts indicates that the cross-price elasticity between tortilla chips and dips is ________,so the two are ________.
A)0.8;substitutes
B)-0.4;complements
C)-0.8;complements
D)0.4;substitutes

Accepted Answer

The negative sign indicates that tortilla chips and dips are complements, meaning that they are typically consumed together. The absolute value of the cross-price elasticity coefficient is 0.8, indicating a strong relationship between the two goods. When the price of tortilla chips increased, the quantity demanded for dips fell by 8 percent, indicating a strong negative relationship between the two goods.

Question 13

Barbara,the consummate hostess,proudly announced as she served dessert,"A port is often the perfect end to a meal,sipped with a piece of my scrumptious chocolate cake." Evidently,Barbara views port and chocolate cake as
A)luxury items.
B)necessities.
C)complementary goods.
D)substitutes for other desserts.

Accepted Answer

Barbara views port and chocolate cake as complementary goods because she suggests that they go well together as a perfect end to a meal.

Question 14

If the cross-price elasticity of demand between beer and wine is 0.31,then beer and wine are
A)complements.
B)price-inelastic goods.
C)substitutes.
D)necessities.

Accepted Answer

A positive cross-price elasticity of demand indicates that the two goods are substitutes. This means that when the price of beer increases, the demand for wine increases as well. Therefore, beer and wine are substitutes.

Question 15

Consider the following pairs of items: 
A.shampoo and conditioner
B.iPhones and earbuds
C.a laptop computer and a desktop computer
D.beef and pork
E.air-travel and weed killer
Which of the pairs listed will have a positive cross-price elasticity?
A)a and b only
B)c and d only
C)e only
D)a,b,and c only

Accepted Answer

The answer of Consider the following pairs of items: 
A.shampoo...

Question 16

If the cross-price elasticity of demand for goods A and B is zero,this means the two goods are unrelated.

Accepted Answer

A zero cross-price elasticity of demand means that the quantity demanded of good A does not change when the price of good B changes, indicating that the two goods are unrelated.

Question 17

In recent years,the prices of new domestically produced cars have been falling.Suppose consumers respond by reducing their demand for used cars and mass transport services such as bus travel.This information suggests that the cross-price elasticity between new cars and used cars,and the cross-price elasticity between new cars and bus travel,are negative.

Accepted Answer

The answer of In recent years,the prices of new domestically...

Question 18

Suppose the cross-price elasticity of demand between DVDs at Amazon.com and DVDs at Buy.com is 3.5.Based on this information,predict what happens when Amazon.com lowers its DVD prices by 10 percent.
A)The quantity of DVDs demanded on Amazon.com will increase by 35 percent.
B)The quantity of DVDs demanded on Buy.com will increase by 35 percent.
C)The quantity of DVDs demanded on Amazon.com will decrease by 35 percent.
D)The quantity of DVDs demanded on Buy.com will decrease by 35 percent.

Accepted Answer

The answer of Suppose the cross-price elasticity of demand between...

Question 19

Studies show that the income elasticity of demand for wine is 5.03 and the income elasticity of demand for spirits is 1.21.This indicates that
A)wine and spirits are luxury goods.
B)wine is a luxury good and spirits are inferior goods.
C)wine and spirits are highly price elastic.
D)wine is a luxury good and spirits are necessities.

Accepted Answer

The income elasticity of demand for both wine and spirits is greater than 1, indicating that they are both normal goods. However, the fact that the elasticity is much higher for wine (5.03) than for spirits (1.21) suggests that wine is a luxury good, while spirits are more of a necessity.

Question 20

What factors would make you more sensitive or less sensitive to price when purchasing gasoline?

Accepted Answer

The answer of What factors would make you more sensitive...

Quiz 6: Elasticity: the Responsiveness of Demand and Supply

The cross-price elasticity between Gillette razors and a related good is -3.4.What happens to the demand for the related good if the price of Gillette razors falls by 10 percent?

In order to prove that Motrin and Ibuprofen are substitutes,one should measure the and get a .

During an economic expansion as consumer incomes rise,holding everything else constant

Economists have estimated that the cross-price elasticity of demand between beer and spirits is -0.50,the income elasticity for spirits is 1.21 and the income elasticity for wine is 5.03.These elasticities mean that beer and spirits are ,and spirits and wine are .

In the alcohol industry,both wine and spirits are considered to be substitutes for beer.

A recent study indicated that "Stricter college alcohol policies such as raising the price of alcohol,or banning alcohol on campus,decreases the number of students who use marijuana." This indicates that the cross-price elasticity between alcohol and marijuana is positive.

If the income elasticity for canned food is 0.8,then canned food is an inferior good.

Demand for staples such as dairy products and bread is likely to be both income and price inelastic.

Economists estimated that the cross-price elasticity of demand for beer and wine is -0.83 and the income elasticity of wine is 5.03.This means that

Which of the following pairs of goods is likely to have a negative cross-price elasticity of demand?

The absolute value of the price elasticity of demand for telescopes is 1.5.Therefore,telescopes can be classified as a luxury.

When the price of tortilla chips rose by 10 percent,the quantity of tortilla chips sold fell 4 percent,and the sale of dips (like salsa and bean dip) fell 8 percent.This set of facts indicates that the cross-price elasticity between tortilla chips and dips is ,so the two are .

Barbara,the consummate hostess,proudly announced as she served dessert,"A port is often the perfect end to a meal,sipped with a piece of my scrumptious chocolate cake." Evidently,Barbara views port and chocolate cake as

If the cross-price elasticity of demand between beer and wine is 0.31,then beer and wine are

Consider the following pairs of items: A.shampoo and conditioner B.iPhones and earbuds C.a laptop computer and a desktop computer D.beef and pork E.air-travel and weed killer Which of the pairs listed will have a positive cross-price elasticity?

If the cross-price elasticity of demand for goods A and B is zero,this means the two goods are unrelated.

Suppose the cross-price elasticity of demand between DVDs at Amazon.com and DVDs at Buy.com is 3.5.Based on this information,predict what happens when Amazon.com lowers its DVD prices by 10 percent.

Studies show that the income elasticity of demand for wine is 5.03 and the income elasticity of demand for spirits is 1.21.This indicates that

What factors would make you more sensitive or less sensitive to price when purchasing gasoline?

Quiz 6: Elasticity: the Responsiveness of Demand and Supply

The cross-price elasticity between Gillette razors and a related good is -3.4.What happens to the demand for the related good if the price of Gillette razors falls by 10 percent?

In order to prove that Motrin and Ibuprofen are substitutes,one should measure the ________ and get a ________.

During an economic expansion as consumer incomes rise,holding everything else constant

Economists have estimated that the cross-price elasticity of demand between beer and spirits is -0.50,the income elasticity for spirits is 1.21 and the income elasticity for wine is 5.03.These elasticities mean that beer and spirits are ________,and spirits and wine are ________.

In the alcohol industry,both wine and spirits are considered to be substitutes for beer.

A recent study indicated that "Stricter college alcohol policies such as raising the price of alcohol,or banning alcohol on campus,decreases the number of students who use marijuana." This indicates that the cross-price elasticity between alcohol and marijuana is positive.

If the income elasticity for canned food is 0.8,then canned food is an inferior good.

Demand for staples such as dairy products and bread is likely to be both income and price inelastic.

Economists estimated that the cross-price elasticity of demand for beer and wine is -0.83 and the income elasticity of wine is 5.03.This means that

Which of the following pairs of goods is likely to have a negative cross-price elasticity of demand?

The absolute value of the price elasticity of demand for telescopes is 1.5.Therefore,telescopes can be classified as a luxury.

When the price of tortilla chips rose by 10 percent,the quantity of tortilla chips sold fell 4 percent,and the sale of dips (like salsa and bean dip) fell 8 percent.This set of facts indicates that the cross-price elasticity between tortilla chips and dips is ________,so the two are ________.

Barbara,the consummate hostess,proudly announced as she served dessert,"A port is often the perfect end to a meal,sipped with a piece of my scrumptious chocolate cake." Evidently,Barbara views port and chocolate cake as

If the cross-price elasticity of demand between beer and wine is 0.31,then beer and wine are

Consider the following pairs of items: A.shampoo and conditioner B.iPhones and earbuds C.a laptop computer and a desktop computer D.beef and pork E.air-travel and weed killer Which of the pairs listed will have a positive cross-price elasticity?

If the cross-price elasticity of demand for goods A and B is zero,this means the two goods are unrelated.

Suppose the cross-price elasticity of demand between DVDs at Amazon.com and DVDs at Buy.com is 3.5.Based on this information,predict what happens when Amazon.com lowers its DVD prices by 10 percent.

Studies show that the income elasticity of demand for wine is 5.03 and the income elasticity of demand for spirits is 1.21.This indicates that

What factors would make you more sensitive or less sensitive to price when purchasing gasoline?

In order to prove that Motrin and Ibuprofen are substitutes,one should measure the and get a .

Economists have estimated that the cross-price elasticity of demand between beer and spirits is -0.50,the income elasticity for spirits is 1.21 and the income elasticity for wine is 5.03.These elasticities mean that beer and spirits are ,and spirits and wine are .

When the price of tortilla chips rose by 10 percent,the quantity of tortilla chips sold fell 4 percent,and the sale of dips (like salsa and bean dip) fell 8 percent.This set of facts indicates that the cross-price elasticity between tortilla chips and dips is ,so the two are .