Q1. Assume that Rajesh Singh’s income increased from $20,000 per year to $30,000 per year, and his demand for “store-brand” bread decreased from 80 loaves to 40 loaves per year. Which of the following most accurately describes Singh’s income elasticity for store-brand bread?

A)   Income elasticity is -0.60 and store-brand bread is an inferior good.

B)   Income elasticity is -1.67 and store-brand bread is an inferior good.

C)   Income elasticity is +1.00 and store-brand bread is a complimentary good.

Q2. The percent change in demand for a good divided by the percent change in the price of an other good is known as the:

A)   income elasticity of demand.

B)   price elasticity of demand.

C)   cross elasticity of demand.

Q3. If a 10% income increase caused a group of consumers to increase their purchases of television sets from 95 to 105, the group's income elasticity of demand for television sets would be closest to:

A)   1.00.

B)   0.10.

C)   2.00.

Q4. Price elasticity of demand is most accurately defined as the change in:

A)   quantity demanded in response to a change in market price.

B)   market price in response to a change in the quantity demanded.

C)   quantity demanded in response to a change in income.

Q5. George’s Appliance
    Center sells big screen televisions. On a representative model, when the price was reduced from $2,450 to $2,275, monthly demand increased from 175 to 211 units. What is the price elasticity of demand?

A)   -1.69.

B)   -2.53.

C)   -2.14.

[此贴子已经被作者于2008-12-31 9:19:09编辑过]

答案和详解如下：

Q1. Assume that Rajesh Singh’s income increased from $20,000 per year to $30,000 per year, and his demand for “store-brand” bread decreased from 80 loaves to 40 loaves per year. Which of the following most accurately describes Singh’s income elasticity for store-brand bread?

A)   Income elasticity is -0.60 and store-brand bread is an inferior good.

B)   Income elasticity is -1.67 and store-brand bread is an inferior good.

C)   Income elasticity is +1.00 and store-brand bread is a complimentary good.

Correct answer is B)         

Average income is ($20,000 + $30,000) / 2 = $25,000, so the percentage change in income is ($30,000 – $20,000) / $25,000 = 40.00%. The average quantity of bread demanded is (80 + 40) / 2 = 60 loaves, so the percentage change in the quantity of bread demanded is (40 – 80) / 60 = -66.67%. Income elasticity of store-brand bread is -66.67 / 40 = -1.67. Since Singh’s income elasticity of demand is negative, store-brand bread is an inferior good.

Q2. The percent change in demand for a good divided by the percent change in the price of an other good is known as the:

A)   income elasticity of demand.

B)   price elasticity of demand.

C)   cross elasticity of demand.

Correct answer is C)

Q3. If a 10% income increase caused a group of consumers to increase their purchases of television sets from 95 to 105, the group's income elasticity of demand for television sets would be closest to:

A)   1.00.

B)   0.10.

C)   2.00.

Correct answer is A)

Income elasticity is the sensitivity of demand to changes in consumer income.

Income elasticity = (percent change in quantity demanded) / (percent change in income) = [(105 − 95) / (100)] / 0.10 = 1

Q4. Price elasticity of demand is most accurately defined as the change in:

A)   quantity demanded in response to a change in market price.

B)   market price in response to a change in the quantity demanded.

C)   quantity demanded in response to a change in income.

Correct answer is A)

Q5. George’s Appliance Center sells big screen televisions. On a representative model, when the price was reduced from $2,450 to $2,275, monthly demand increased from 175 to 211 units. What is the price elasticity of demand?

A)   -1.69.

B)   -2.53.

C)   -2.14.

Correct answer is B)

Price elasticity of demand = % change in quantity demanded / % change in price

% change in quantity = (211 − 175) / [(211 + 175)/2] = 0.187

% change in price = (2,275 − 2,450) / [(2,275 + 2,450)/2] = -0.074

Price elasticity of demand = 0.187 / -0.074 = -2.53

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