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# Look at the five goods below to determine which of the five best fits the following

Look at the five goods below to determine which of the five best fits the following
statement: How much people spend on a good tends to be independent of its price.

a.birthday candles

b.automobile

c.mattress

d.lobster dinner

e.rock concert

62.              If Lisa Beth needs special film for her expensive new camera, then for her these two
goods are

a.substitute

b.complementary

c.unit elastic

d.elastic

e.inelastic

63.              The textbook tells us that in the short run, people typically ___________ price changes
when compared to the long run.

a.are very responsive to

b.are more sensitive to

c.are less sensitive to

d.do not respond to

e.are unaware of

64.              Since it is always a negative number, economists use the convention of taking the
absolute value of

a.income elasticity of demand

b.cross price elasticity of demand

c.price elasticity of supply

d.price elasticity of demand

e.any elasticity calculation

65.              Richstone Bakery reduces the price of wheat bread from \$2 to \$1 and finds that quantity
demanded increases from 100 to 120 loaves.  Richstone calculates that the price elasticity
of demand for wheat bread is (approximately)

a.0.00

b.0.30

c.5.00

d.10.5

e.2.00

66.              Tara buys 4 alternative rock CDs when price is \$10 and only 2 when price is \$14. Using
the method of average values, her price elasticity of demand for alternative rock CDs is

a.0.00

b.0.50

c.2.00

d.5.00

e.10.0

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

a.decrease

b.increase

c.remain unchanged

d.approach infinity

e.increase or decrease, depending on the character of the good

68.              If the price elasticity of demand for football tickets is 4.5, then a 10 percent increase in
the price of football tickets will generate a

a.4.5 percent decrease in quantity demanded

b.4.5 percent increase in quantity demanded

c.45 percent decrease in quantity demanded

d.45 percent increase in quantity demanded

e.450 percent increase in quantity demanded

69.              A health club sells 50 memberships when the monthly price is \$60 and 70 memberships
when the monthly price is \$40. Using the method of average values, the price elasticity of
demand for memberships at this health club is

a.6.00

b.0.10

c.1.00

d.0.25

e.0.83

70.              The “Applied Perspective” titled “Cross Elasticity in the Salmon Industry” suggests that

the cross elasticity of demand between farm-raised salmon and wild salmon is

a.positive and fairly large so the two types of fish are close substitutes consumers

b.positive but close to zero so the two types of fish are in different markets

c. negative because consumers like to serve both types as complementary goods

d.high so that a price decrease leads to a total revenue increase

e.low so that a price decrease leads to a total revenue decrease

Dec 10 2019 View more View Less