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Home / Questions / If the income elasticity of a good is negative, say –1.8, we can infer that the good is a

If the income elasticity of a good is negative, say –1.8, we can infer that the good is a

 If the income elasticity of a good is negative, say –1.8, we can infer that the good is a(n)

a.luxury good, such as holiday travel

b.substitute good, such as Pepsi, with Coke available

c.complementary good, such as Pepsi, with a candy bar available

d.inferior good, such as a non-color televison

e.essential good, such as food

52.              If the price elasticity of demand for a good is 0.45, it is most likely that the good

a.has many close substitutes

b.is a luxury good

c.is high-priced

d.is a complementary good

e.has few close substitutes

53.              If the price elasticity of demand for a good is 3.0, it is clear that the good

a.would be a poor choice to tax if the object is to raise tax revenue

b.would be an excellent choice to tax if the object is to raise revenue

c.is an essential good

d.has a demand curve that is price inelastic at every price level

e.is a complementary good

54.              Which of the five goods, A to E, whose price elasticities of demand are shown in the
                            choices below, is the best candidate to tax if the goal is to acquire maximum tax revenue?

a.good A, with price elasticity of 0.90

b.good B, with price elasticity of 3.40

c.good C, with price elasticity of 1.25

d.good D, with price elasticity of 0.50

e.good E, with price elasticity of 1.00

55.              If the quantity you buy of a good increases when your income increases, the good is
                            clearly a(n)

a.essential good

b.inferior good

c.substitute good

d.complementary good

e.normal good

56.              If the demand for a good is price inelastic, a tax on it will

a.raise price, raise tax revenue, shift the supply curve to the right

b.lower price, lower tax revenue, shift the supply curve to the right

c.raise price, raise tax revenue, shift the supply curve to the right

d.raise price, raise tax revenue, shift the supply curve to the left

e.lower price, raise tax revenue, shift the demand curve to the left

57.              Picture a linear downward-sloping demand curve. The price elasticity of demand

a.remains the same for all price ranges on that demand curve

b.varies among the price ranges on that demand curve

c.varies but is always greater than one whatever the price range on that demand curve

d.is always 1.0 for any price range where the price difference is $1, such as $10 and $9

e.is always zero

58.              Picture a linear downward-sloping demand curve. If the price continues to fall, the  price
                            elasticity will

a.change from elastic, to unit elastic, to inelastic

b.remain unchanged whatever the price range

c.change from inelastic, to elastic, to unit elastic

d.change from unit elastic, to elastic, to inelastic

e.change from elastic, to inelastic, to unit elastic

59.              Price elasticity of demand relates to the

a.sensitivity of people’s quantity demanded to changes in price

b.sensitivity of price to changes in people’s quantity demanded

c.percentage shifts in demand when price changes

d.percentage shifts in demand for every one-percent change in price

e.ratio of actual to expected price changes

60.              A person’s sensitivity to a price change for a good, such as breakfast cereal, depends on
                            all of the following except the

a.price of the good

b.cost of producing the good

c.person’s income

d.availability and closeness of substitutes

e.time the person has to adjust to the price change

Dec 10 2019 View more View Less

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