Question 1

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:
A.pizza is a normal good and a luxury.
B.pizza is a normal good and a necessity.
C.pizza is an inferior good, since his expenditure rose by less than the increase in income.
D.demand for pizza is price-elastic.

Accepted Answer

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Question 2

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?
A.Total revenue will rise.
B.Total revenue will fall.
C.Total revenue will remain unchanged.
D.Not enough information is given to answer the question.

Accepted Answer

The answer of The income elasticity of demand for peaches...

Question 3

(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:
A)-1.
B)V1.
C)1.25.
D)1.5.

Accepted Answer

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Question 4

The income elasticity of demand of a normal good is:
A)between 1 and 0.
B)less than 0.
C)equal to 0.
D)greater than 0.

Accepted Answer

The income elasticity of demand of a normal good is greater than 0, indicating that as income increases, the demand for the good also increases. A value of 1 indicates that the quantity demanded increases at the same rate as income, while a value less than 1 indicates a smaller increase in quantity demanded as income increases. The income elasticity of demand of a normal good is greater than 0 because as income increases, the demand for the good also increases. A value between 1 and 0 indicates that the good is a necessity (inelastic demand), while a value greater than 1 indicates that the good is a luxury item (elastic demand). A value less than 0 would indicate that the good is an inferior good (demand decreases as income increases).

Question 5

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:
A.a normal good.
B.an inferior good.
C.a complementary good.
D.a substitute good.

Accepted Answer

The answer of If your purchases of shoes decrease from...

Question 6

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

Accepted Answer

The answer of If your income increases and your consumption...

Question 7

For a good to be considered a normal good, the_____ must be _.
A.income elasticity of demand; between 1 and 0
B.cross-price elasticity of demand; less than 0
C.cross-price elasticity of demand; equal to 0
D.income elasticity of demand; greater than 0

Accepted Answer

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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.Using the midpoint formula, his income elasticity of demand for pro football game tickets is equal to , and football
game tickets are goods.
A.-1/3; inferior
B.+2/3; normal
C.-3; inferior
D.+3; normal

Accepted Answer

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Question 9

If the income elasticity of demand for a good is _______, the good is said to be _.
A.positive; inferior good
B.negative; substitute good
C.positive; normal good
D.positive; positive good

Accepted Answer

The answer of If the income elasticity of demand for...

Question 10

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?
A.Demand will increase by more than 5.7%.
B.Demand will increase by about 2.9%.
C.Demand will decrease by more than 5.7%.
D.Demand will decrease.

Accepted Answer

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Question 11

If your income increases and your consumption of a good increases, then, for you, that good is considered:
A.a negative good.
B.a positive good.
C.an inferior good.
D.a normal good.

Accepted Answer

The answer of If your income increases and your consumption...

Question 12

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 _.
A.normal; positive
B.normal; negative
C.inferior; positive
D.inferior; negative

Accepted Answer

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Question 13

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

Accepted Answer

The answer of If the income elasticity of demand for...

Question 14

(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:
A)0.33
B)0.57
C)0.95
D)1.73

Accepted Answer

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Question 15

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.a normal good.
B.an inferior good.
C.a complementary good.
D.a substitute good.

Accepted Answer

The answer of If your purchases of shoes increase from...

Question 16

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:
A.20% more peanut butter on the shelves.
B.5% more peanut butter on the shelves.
C.10% more peanut butter on the shelves.
D.10% less peanut butter on the shelves.

Accepted Answer

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Question 17

(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:
A.1.2
B.-1.2
C.0.825
D.0.40

Accepted Answer

The answer of (Table: Market for Pizza) If income changes...

Question 18

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

Accepted Answer

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Question 19

If I told you that the income elasticity for hybrid cars was positive, you would know that:
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, the demand for hybrid cars also increases. This indicates that hybrid cars are a normal good, as opposed to an inferior good where demand decreases as income increases. The availability of substitutes does not affect income elasticity.

Question 20

Which of the following statements is true?
A.When the income elasticity of demand is positive, the good is an inferior good.
B.When the income elasticity of demand is negative, the good is a normal good.
C.Income elasticity of demand measures how much the demand for a good is affected by changes in consumers' incomes.
D.Income elasticity of demand measures the effect of the change in one good's price on the quantity demanded of the other good.

Accepted Answer

The answer of Which of the following statements is true?
A.When...

Quiz 6: Elasticity

(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:

The income elasticity of demand of a normal good is:

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: A.a normal good. B.an inferior good. C.a complementary good. D.a substitute good.

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

For a good to be considered a normal good, the_____ must be _. A.income elasticity of demand; between 1 and 0 B.cross-price elasticity of demand; less than 0 C.cross-price elasticity of demand; equal to 0 D.income elasticity of demand; greater than 0

If the income elasticity of demand for a good is _______, the good is said to be _. A.positive; inferior good B.negative; substitute good C.positive; normal good D.positive; positive good

If your income increases and your consumption of a good increases, then, for you, that good is considered: A.a negative good. B.a positive good. C.an inferior good. D.a normal good.

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

(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:

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.a normal good. B.an inferior good. C.a complementary good. D.a substitute good.

(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: A.1.2 B.-1.2 C.0.825 D.0.40

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

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