U3A3 Quiz

Assume that a 4 percent increase in income across the economy produces an 8 percent increase in the quantity demanded of good X. The coefficient of income elasticity of demand is:

. positive and therefore X is a normal good.

We would expect the cross elasticity of demand between dress shirts and ties to be:

a. negative, indicating complementary goods.

The supply of known Monet paintings is:

a. perfectly inelastic.

Compared to coffee, we would expect the cross elasticity of demand for:

b. tea to be positive, but negative for cream.

The cross elasticity of demand for product X with respect to the price of product Y is -1.2. It can be inferred that X and Y are:

c. Substitute products NO

Which of the following goods will least likely suffer a decline in demand during a recession?

c. Toothpaste

The main determinant of elasticity of supply is the

d. amount of time the producer has to adjust inputs in response to a price change.

If the income elasticity of demand for lard is -3.00, this means that:

d. lard is an inferior good.

Assume that a 3 percent increase in income across the economy produces a 1 percent decline in the quantity demanded of good X. The coefficient of income elasticity of demand for good X is:

d. negative and therefore X is an inferior good.

The formula for cross elasticity of demand is percentage change in:

quantity demanded of X/percentage change in price of Y