(Solution) If The Income Elasticity Of Demand Is +4 A. The Good Is An Inferior Good. The Good Is An Inelastic Normal Good. The Good Is An Elastic Normal Good.... | Snapessays.com


(Solution) If the income elasticity of demand is +4 a. the good is an inferior good. the good is an inelastic normal good. the good is an elastic normal good....


21. If the income elasticity of demand is +4 a. the good is an inferior good. b. the good is an inelastic normal good. c. the good is an elastic normal good. d. the good is an elastic inferior good. e. none of the above.

 

22. Luxuries are distinguished from necessities by a. the number of substitutes available for each. b. the fact that luxuries have high prices and necessities have low ones. c. the high price elasticity of demand for luxuries and the low price elasticity of demand for necessities. d. the high income elasticity of demand for luxuries and the low income elasticity of demand for necessities. e. the absolute slope of the Engel curve.

 

23. Which of the following is likely to have a negative cross price elasticity of demand? a. Aluminum foil and cellophane. b. Jelly beans and licorice sticks. c. Bethlehem steel and imported Japanese steel. d. Big Macs and French fries. e. Buggy whips and bug spray.

 

24. In a 1956 Supreme Court case, economists for E.I. DuPont discovered that the cross price elasticity between its cellophane and the prices of similar wrapping materials was large and positive. This evidence suggested: 1. DuPont’s control of cellophane could not be construed as being monopolistic because the other goods in question were strong substitutes and therefore in competition with each other. 2. The demand of cellophane was price elastic. 3. Cellophane was an inferior good. a. 1 only. b. 2 only. c. 1 and 2 only. d. 2 and 3 only. e. 1, 2, and 3.

 

25. In the early 1940s, Columbia Records, after considerable study, decided to reduce the price of classical records with the result that total expenditure on classical records rose greatly. This would imply that at the time. a. the demand for classical records was greater than that for popular records. b. the demand for classical records was highly inelastic. c. the demand for classical records was highly elastic. d. the demand curve for classical records was upward sloping. e. the supply of classical records was very inelastic.

 

26. The income elasticity of an inferior good is a. negative because as people get richer they increase their purchases of the good by smaller and smaller amounts. b. 1 because the increased income offsets the desire to consume less of the good because it is inferior. c. greater than 1 because the richer you get, the less you consume of the good. d. negative because higher income leads to a reduction in the amount consumed of the product.

 

27. The income elasticity of demand a. is negative for normal goods. b. is positive for inferior goods. c. equals the relative change in demand for a good divided by the relative change in the income of consumers, all else being equal. d. is correctly described by all of the above.

 

28. If a good’s income-elasticity-of-demand estimate equaled a. 2.46, an economist would call the good a necessity. b. 0.37, an economist would call the good a luxury. c. -0.50, an economist would call the good an inferior one. d. -0.50, an economist would call the good a complementary one.

 

29. With Y on the vertical axis and X on the horizontal axis, if the price-consumption curve for X is upward sloping to the right, a. the price elasticity of demand for X is relatively elastic. b. the price elasticity of demand for X is relatively inelastic. c. X is an inferior good. d. the price elasticity of demand for X is equal to -1.

 

30. With Y on the vertical axis and X on the horizontal axis, if the price-consumption curve for X is downward sloping to the right, a. the price elasticity of demand for X is relatively elastic. b. the price elasticity of demand for X is relatively inelastic. c. X is an inferior good. d. the price elasticity of demand for X is equal to -1.

 


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This question was answered on: May 23, 2022

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