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Which of the following goods is likely to have the highest price elasticity of demand

Which of the following goods is likely to have the highest price elasticity of demand?

A) Salt

B) Gasoline

C) Life-saving drugs

D) Potato chips

 

32) Which of the following goods is likely to have the lowest price elasticity of demand?

A) Life-saving drugs

B) Potato chips

C) Chocolates

D) Decorative flowers

33) The price elasticity of demand for a good that is a necessity is likely to be:

A) unit elastic.

B) perfectly elastic.

C) elastic, but not perfectly elastic.

D) inelastic.

 

34) As the number of available substitutes increases, the price elasticity of demand for a good:

A) initially increases then decreases.

B) initially decreases then increases.

C) decreases.

D) increases.

 

35) Greenaqua Corp. is the only supplier of packaged drinking water in the country Lithasia. Due to the profits the firm enjoys, new corporations are interested in entering the market. If a few more companies producing their own line of packaged drinking water enter the market, which of the following statements will be true about Greenaqua Corp.?

A) The profit Greenaqua Corp. earns on their line of packaged drinking water is likely to increase.

B) The elasticity of demand of Greenaqua Corp.'s product is likely to increase.

C) The elasticity of demand of Greenaqua Corp.'s product is likely to decrease.

D) The elasticity of demand of Greenaqua Corp.'s product is likely to remain the same.

 

36) As a consumer spends a larger share of his income on a particular good, the price elasticity of demand for that good:

A) increases.

B) decreases.

C) initially decreases then increases.

D) remains the same.

37) Which of the following statements is true about price elasticity of demand?

A) As the number of substitutes for a product increases, the price elasticity of demand for that good decreases.

B) If the budget share of a particular good in a consumer's bundle increases, the price elasticity of demand for that good is likely to decrease.

C) The price elasticity of demand for a good is generally higher in the long run than in the short run.

D) The demand for a good with a price elasticity of demand of zero is highly responsive to price changes.

 

38) The cross-price elasticity of demand for a good is the:

A) percentage change in the quantity demanded for a good due to a percentage change in the consumer's income.

B) percentage change in the quantity demanded for a good due to a percentage change in the good's price.

C) percentage change in the quantity demanded for a good due to a percentage change in tax rates.

D) percentage change in the quantity demanded for a good due to a percentage change in the price of related goods.

 

39) Which of the following statements is true of cross-price elasticity of demand?

A) The cross-price elasticity of demand between substitutes is zero.

B) The cross-price elasticity of demand between complements is zero.

C) The cross-price elasticity of demand between substitutes is negative.

D) The cross-price elasticity of demand between complements is negative.

 

40) Which of the following pairs of goods has negative cross-price elasticity?

A) Pens and paper notebooks

B) Nokia and Samsung cell phones

C) Compact Disks (CDs) and MP3s

D) Motorcycles and typewriters

Mar 14 2020 View more View Less

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