Multiple Choice Flashcards
1
Q
- The price elasticity of demand is dependent on
the number of substitutes.
the relative share of a consumer’s income spent on the good.
the time involved in the price change
all of the above
A
all of the above
2
Q
- Which of the following characteristics of a product tends to make the elasticity of demand greater?
there are no good substitutes for the product.
the product is a necessity.
the product is relatively expensive.
the time period is relatively short.
A
the product is relatively expensive.
3
Q
3. If the income elasticity of a demand for a good is negative, then the good is: none of these luxury good an inferior good a normal good
A
an inferior good
4
Q
- The more money people make, the more pieces of donuts they buy. We can conclude that
all of these
demand for donuts is highly price elastic.
donuts are an inferior good.
donuts are a normal good.
A
donuts are a normal good.
5
Q
- The demand for salt is probably more inelastic than the demand for potatoes because *
salt is cheap relative to most users’ incomes and has few good substitutes.
salt will keep longer than potatoes before spoiling.
potatoes require salt but salt does not require potatoes.
there is so much potential salt in the ocean.
A
salt is cheap relative to most users’ incomes and has few good substitutes.
6
Q
6. If a demand curve is vertical, then the price elasticity of demand for this good is equal to * infinity. one none of these zero
A
zero
7
Q
- If bread is a normal good, then which of the following could be the value of income elasticity of demand? *
1.4
0.8
none of these
0.2
A
-
8
Q
8. Suppose a study finds that as people's incomes rise, they tend to ride less "habal-habal" because they are more likely to have a car. This would mean that "habal-habal" rides are * inferior goods normal goods complementary goods substitute goods
A
inferior goods
9
Q
9. \_\_\_\_\_\_\_\_\_\_\_ demand means that consumers are sensitive to the price at which a product is sold and will not buy it if the price rises by what they consider to be too much. * elastic unit elastic perfectly inelastic inelastic
A
inelastic
10
Q
- The price of chocolate drinks doubles, but the quantity demanded changes very little. Which of the following would not be a likely explanation for this phenomenon? *
There is no available good substitute for chocolate drink.
Chocolate drink is not a very big part of most people’s budget
Chocolate drink is highly price elastic.
People feel they need to drink chocolate, rather than just wanting it.
A
There is no available good substitute for chocolate drink.
11
Q
11. If good X and Y are complements, which of the following could be the value of cross-price elasticity of demand? all of these 1 0 1
- 1
A
- 1
12
Q
12. Which of the following is most likely to be an inferior good? * airplane tickets bus tickets cinema tickets eyeglasses
A
bus tickets
13
Q
- Good Y has a cross-price elasticity of demand with respect to Good X of 0.5 and 100 units of Good Y are demanded when Good X costs 50 pesos. A rise in the price of Good X to 75 pesos will lead to a change in the demand for Good Y to *
150 units
25 units
125 units
A
75 units
14
Q
- The demand for face masks is relatively inelastic because one percent change in price results in *
less than a one percent decrease in quantity demanded.
a one percent decrease in the quantity demanded.
no change in quantity demanded.
more than one percent decrease in quantity demanded.
A
no change in quantity demanded.
15
Q
- When the price of rice rose 50% the quantity of rice sold fell 25% and the sale of bread also increase by 25%. This set of facts indicates that: *
the cross price elasticity between rice and bread is negative so the two are complements.
the demand for bread is price elastic.
the cross price elasticity between rice and bread is positive so the two are substitutes.
less than a one percent decrease in quantity demanded.
A
the cross price elasticity between rice and bread is negative so the two are complements.
