Question 1

(Table: Prices, Quantity Demanded, and Income for Jeremy) Look at the table Prices, Quantity Demanded, and Income for Jeremy.Between the two years listed, Jeremy's income elasticity of demand for coffee equals ________ and donuts are a(n) good.
A.0.20; inferior good
B.2; normal good
C.2; inferior good
D.0.20; normal good

Accepted Answer

The answer of (Table: Prices, Quantity Demanded, and Income for...

Question 2

Goods A and B have a positive cross-price elasticity of demand.This means goods A and B are:
A.normal goods.
B.substitutes.
C.complements.
D.inferior goods.

Accepted Answer

The answer of Goods A and B have a positive...

Question 3

Suppose the cross-price elasticity between two goods is 1.5.If the price of one good increases by 10%, then the quantity demanded of the other good will:
A.decrease by 15%.
B.increase by 15%.
C.decrease by 1.5%.
D.increase by 1.5%.

Accepted Answer

A cross-price elasticity of 1.5 means that a 1% increase in the price of one good leads to a 1.5% increase in the quantity demanded of the other good. Therefore, a 10% increase in the price of one good would lead to a 15% increase in the quantity demanded of the other good.

Question 4

Tomas produces 100 cartons of free range eggs when the price is $5 and 150 cartons of free range eggs when the price is $7.What is the value of Tomas's price elasticity of supply?
A.1.2
B.2.0
C.1.0
D.3.2

Accepted Answer

The price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. Here, the change in quantity supplied is 150 - 100 = 50 cartons, and the change in price is $7 - $5 = $2. The percentage change in quantity supplied is (50 / 100) * 100 = 50%, and the percentage change in price is (2 / 5) * 100 = 40%. The price elasticity of supply is then 50% / 40% = 1.25, which rounds to 1.2, making option A correct.

Question 5

One would expect to see the supply become more price as harvest season
approaches and crops are being brought in from the fields.
A.elastic
B.inelastic
C.unit-elastic
D.inferior

Accepted Answer

The answer of One would expect to see the supply...

Question 6

Jessica's income increased by 10% this year.In the same year, Jessica's quantity demanded of milk increased by 10% and her quantity demanded for bread increased by 5%.This means that for Jessica:
A.both milk and bread are inferior goods.
B.both milk and bread are normal goods.
C.milk is an inferior good, but bread is a normal good.
D.milk is a normal good, but bread is an inferior good.

Accepted Answer

When an individual's income increases and their demand for a product also increases, those products are considered normal goods. Since Jessica's demand for both milk and bread increased with her income, both are normal goods.

Question 7

Decreases in input costs and a longer time since a price change will tend to:
A.increase the price elasticity of supply.
B.decrease price elasticity of supply.
C.have no impact on the price elasticity of supply.
D.increase price elasticity of supply with decreases in input costs but decrease price elasticity of supply with length of time.

Accepted Answer

Decreases in input costs can make it easier for producers to adjust their output in response to price changes, thus increasing the price elasticity of supply. Similarly, a longer time since a price change allows producers more time to adjust their production processes and capacities, also increasing the price elasticity of supply.

Question 8

The price of coffee increases by 10%, and as a result, Alex purchases fewer doughnuts.For Alex, coffee and doughnuts are:
A.complements.
B.substitutes.
C.inferior goods.
D.normal goods.

Accepted Answer

Complements are goods that are typically consumed together. In this scenario, coffee and doughnuts are consumed together. When the price of coffee increases, Alex may choose to purchase fewer doughnuts as a result. This suggests that they are complements, rather than substitutes, inferior goods, or normal goods.

Question 9

If the percentage change in the quantity demanded of a good is greater than the percentage change in income and in the same direction, then this good will have an income elasticity:
A.greater than 1 and it is a normal good.
B.less than 1 and it is a normal good.
C.equal to 1 and it is a normal good.
D.less than 1 and it is an inferior good.

Accepted Answer

The answer of If the percentage change in the quantity...

Quiz 6: Elasticity

Goods A and B have a positive cross-price elasticity of demand.This means goods A and B are: A.normal goods. B.substitutes. C.complements. D.inferior goods.

Suppose the cross-price elasticity between two goods is 1.5.If the price of one good increases by 10%, then the quantity demanded of the other good will: A.decrease by 15%. B.increase by 15%. C.decrease by 1.5%. D.increase by 1.5%.

Tomas produces 100 cartons of free range eggs when the price is $5 and 150 cartons of free range eggs when the price is $7.What is the value of Tomas's price elasticity of supply? A.1.2 B.2.0 C.1.0 D.3.2

One would expect to see the supply become more price as harvest season approaches and crops are being brought in from the fields. A.elastic B.inelastic C.unit-elastic D.inferior

The price of coffee increases by 10%, and as a result, Alex purchases fewer doughnuts.For Alex, coffee and doughnuts are: A.complements. B.substitutes. C.inferior goods. D.normal goods.