Demand is relative less elastic under which of the following situations? O a. Shorter time frame than longer time frame O b. More substitutes available than less substitutes available O c. Lower proportion of budget spend on a good than a larger budget proportion O d. Goods are more necessities than luxuries Oe. All except (b) above

Demand is relative less elastic under which of the following situations? O a. Shorter time frame than longer time frame O b. More substitutes available than less substitutes available O c. Lower proportion of budget spend on a good than a larger budget proportion O d. Goods are more necessities than luxuries Oe. All except (b) above

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter6: Consumer Choices

Section: Chapter Questions

Problem 15CTQ: Income Effects depend on the income elasticity of demand for each good limit you buy. If one of the...

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Economists define normal goods as having a positive income elasticity. We can divide normal goods into two types: Those whose income elasticity is less than one and those whose income elasticity is greater than one. Think about products that would fall into each category. Can you come up with a name for each category?
If a 10 decrease in the price of one product that you buy causes an 8 increase in quantity demanded of that product, will another 10 decrease in the price cause another 3 increase (no more and no less) in quantity demanded?
Suppose that your demand schedule for DVDs is as follows: Price Quantity Demanded (income = 10,000) Quantity Demanded (income = 12,000) 8 40 DVDs 50 DVDs 10 32 45 12 24 30 14 16 20 16 8 12 a. Use the midpoint method to calculate your price elasticity of demand as the price of DVDs increases from 8 to 10 if (i) your income is 10,000 and (ii) your income is 12,000. b. Calculate your income elasticity of demand as your income increases from 10,000 to 12,000 if (i) the price is 12 and (ii) the price is 16.
Income elasticity of demand is the ratio of to a percentage change in the consumer's income, prices remaining constant. O a. percentage change in the price of the commodity O b. percentage change in the price of substitutes O c. percentage change in the demand of the commodity O d. percentage change in the amount spent on the commodity
A common determinant of both the price elasticity of demand and the price elasticity of supply for a product is O a. the availability of complements to the product. b. the length of the adjustment period under consideration. C. the availability of close substitutes for the product. d. the proportion of the consumer's budget spent on the product. O e. the additional cost of increasing production.
There is a negative relationship between the price of fuel and quantity demanded for cars, as these two goods are O a. Substitute goods O b. Normal goods Oc Complementary goods O d. Inferior goods Which of the following factors cause a contraction in quantity demanded for a commodity? O a. A rise in the price of the commodity O b. A decrease in the price of complementary goods Oc An increase in the price of its substitutes O d. An increase in the taste and preferences of the consumer for the commodity
Cross elasticity of demand for complimentary goods is O a. Positive O b. Zero CO c. None of these given option O d. Negative
QUESTION 34 For a particular good, a 1 percent increase in price causes a 3 percent decrease in the quantity demanded. Which one of the following statements is true? O a. The good has high income elasticity O b. The good is a necessity O c. The total revenue will increase O d. There are many close substitutes for this good
QUESTION 7 If price elasticity of demand for a good is 0.45 this means O A. A change in price will result in a larger percentage change in quantity demanded B. An increase in price of 10% will result in a 4.5% decrease in quantity demanded OC. A 10% decrease in price will result in a 4.5% decrease in quantity demanded O D. None of the above is correct
If the cross elasticity of demand is -2: O a. The products are substitutes O b. The products are complements O c. The good is normal O d. The good is inferior
9 A positive cross-elasticity of demand for two products indicates that they are: Multiple Choice O O substitutes complements independent goods. normal goods
The price elasticity of demand is more likely to be inelastic if Othere are a lot of substitutes available. O the price of the product is a large fraction of income. Othere is a long time frame involved. O the product is a necessity.