Q11. If quantity demanded declines 20% when incomes fall 3%, this good is:

A)   a necessity.

B)   a luxury good.

C)   an inferior good.

Q12. Income elasticity is defined as the:

A)   change in quantity demanded divided by the change in income.

B)   percentage change in income divided by the percentage change in the quantity demanded.

C)   percentage change in the quantity demanded divided by the percentage change in income.

Q13. When household incomes go down and the quantity of a product demanded goes up, the product is:

A)   a necessity.

B)   an inferior good.

C)   a normal good.

Q14. If the price elasticity of demand is -1.5 and you increase the price of the product 2%, the quantity demanded will (closest to):

A)   decrease 1.5%.

B)   decrease 3%.

C)   decrease 0.75%.

Q15. If the price of a candy bar increases from $0.50 to $0.55 and the quantity demanded decreases from 267 to 235, the price elasticity of demand is:

A)  -1.34.

B)  1.34.

C)  -1.23.

答案和详解如下：

Q11. If quantity demanded declines 20% when incomes fall 3%, this good is:

A)   a necessity.

B)   a luxury good.

C)   an inferior good.

Correct answer is B)

Income elasticity is the sensitivity of demand to changes in consumer income. Income elasticity for this good = (percent change in quantity demanded) / (percent change in income) = -20 / -3 = 6.7. Normal goods with high income elasticities (absolute values > 1) are considered luxury goods, a type of normal good that experiences a greater percentage increase in demand than the percentage increase in income.

Q12. Income elasticity is defined as the:

A)   change in quantity demanded divided by the change in income.

B)   percentage change in income divided by the percentage change in the quantity demanded.

C)   percentage change in the quantity demanded divided by the percentage change in income.

Correct answer is C)

Income elasticity is defined as the percentage change in quantity demanded divided by the percentage change in income. Normal goods have positive values for income elasticity and inferior goods have negative income elasticities.

Q13. When household incomes go down and the quantity of a product demanded goes up, the product is:

A)   a necessity.

B)   an inferior good.

C)   a normal good.

Correct answer is B)

When household incomes go down and the quantity demanded of a product goes up, the product is an inferior good. Inferior goods include things like bus travel and margarine.

Q14. If the price elasticity of demand is -1.5 and you increase the price of the product 2%, the quantity demanded will (closest to):

A)   decrease 1.5%.

B)   decrease 3%.

C)   decrease 0.75%.

Correct answer is B)

If the price elasticity of demand is -1.5, and you increase the price of the product 2%, the quantity demanded will decrease approximately 3%. When the price elasticity is negative, it means that price and demand move in opposite directions. Given a price decrease, demand will increase and vice versa. The absolute value, 1.5, indicates that demand will move one-and-a-half times as much as price.

Q15. If the price of a candy bar increases from $0.50 to $0.55 and the quantity demanded decreases from 267 to 235, the price elasticity of demand is:

A)  -1.34.

B)  1.34.

C)  -1.23.

Correct answer is A)

Price elasticity of demand is calculated by dividing the percent change in quantity demanded by the percent change in price, using the average value of the variable in the computations. The percent change in quantity demanded is (235 − 267) / [(235 + 267) / 2] = -32 / 251 = -0.127 or -12.7%. The percent change in price is = (0.55 − 0.50) / [(0.55 + 0.50) / 2] = 0.05 / 0.525 = 0.095 or 9.5%. The price elasticity of demand is -12.7 / 9.5 = -1.34.

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