Question 1
2 / 2 pts
You are given a list of income elasticity of demand values. Which one represents a necessity?
–5
–0.5
0
5
0.5
Question 2
2 / 2 pts
The income elasticity of demand for a good measures the responsiveness of ________ to a change in
________.
quantity demanded; price of a related good
quantity demanded; income
demand; price of good
quantity demanded; price of a good
income; quantity demanded
Question 3
2 / 2 pts
In the accompanying graph, the price elastic portion of demand is found in the ________ region and the
price inelastic portion of demand is found in the ________ region of the graph.
middle; lower
lower; upper
upper; lower
middle; middle
None of these choices are correct.
Question 4
2 / 2 pts
If the income elasticity of demand for a good is 0.5, the good will be a(n):
complement good.
substitute good.
necessity good.
inferior good.
luxury good.
Question 5
2 / 2 pts
If the cross-price elasticity between Good A and Good B is –1.5 and the percentage change in
quantity demanded of Good B is 15%, what is the percentage change in the price of Good A?
–10%
–0.10%
–11.50%
–1%
11.50%
Question 6
2 / 2 pts
The city of Barlow is known for its wide variety of ice cream shops. What will happen if Nick’s Ice
Cream Palace raises the price of its ice cream cones?
Demand will decrease by a greater proportion than the price.
Demand will increase by a greater proportion than the price.
The quantity demanded will decrease by a greater proportion than the price.
The quantity demanded will increase by a greater proportion than the price.
Demand will not change.
Question 7
2 / 2 pts
If the elasticity of demand for Good A is –3, a 33% decrease in quantity demanded of Good A results
from a(n):
99% decrease in the price of Good A.
99% increase in the price of Good A.
11% decrease in the price of Good A.
11% increase in the price of Good A.
33% decrease in the price of Good A.
Question 8
2 / 2 pts
When the price elasticity of demand is elastic, a consumer is:
completely unresponsive to a change in price.
relatively unresponsive to a change in price.
unaffected by a change in price.
relatively responsive to a change in price.
completely responsive to a change in price.
Question 9
2 / 2 pts
If the cross-price elasticity of demand is 6, Good A and Good B are:
inferior goods.
complements.
substitutes.
normal goods.
luxury goods.
Question 10
2 / 2 pts
As you move right along a demand curve, the price elasticity of demand:
becomes more inelastic.
becomes more elastic.
does not change.
becomes infinite.
moves closer to zero.
Question 11
2 / 2 pts
If the price elasticity of demand for Good A is –0.2 and the price increases from $2.25 to $2.75, the
percentage change in the quantity demanded of Good A is:
–100%.
100%.
4.0%
–4.0%.
unknown because not enough information is provided.
Question 12
2 / 2 pts
If the income elasticity of demand for laptops is 3.5, you know that laptops are a(n):
substitute good.
inferior good.
luxury good.
necessity good.
complement good.
Question 13
2 / 2 pts
Demand is almost always more price elastic in the long run because:
people’s preferences change.
newer versions of a good/service replace older ones.
production of the good/service stops.
more options become available and people can make different choices.
government regulations increase.
Question 14
2 / 2 pts
Assume that the market for pencils is in equilibrium and that demand is very price elastic. The
popularity of digital tablets and electronic pens increases and demand for pencils declines. The
equilibrium change in quantity demanded is:
0 (zero).
relatively small.
proportional to the shift in demand.
relatively large.
infinite.
Question 15
2 / 2 pts
When incomes fall by 20%, quantity demanded of specialty baked goods falls by 50%. Specialty baked
goods are:
inferior goods.
necessities.
substitutes for mass-produced bread.
luxuries.
complements to butter.
