ECON 201 Ch. 6

b. income; greater than 0

For a good to be considered normal, the _____ elasticity of demand must be _____. a. income; between 1 and 0 b. income; greater than 0 c. cross-price; equal to 0 d. cross-price; less than 0

d. +3; normal

Eric's income increased from $40,000 to $50,000 per year. Eric's consumption of tickets to pro football games increased from two to four per year. By the midpoint formula, his income elasticity of demand for pro football game tickets is equal to _____, and football game tickets are _____ goods. a. -0.33; inferior b. +0.67; normal c. -3; inferior d. +3; normal

a. be less price-elastic.

If a good is a necessity with few substitutes, all others things equal, then demand will tend to: a. be less price-elastic. b. have price elasticity equal to 1. c. be the same as that of a luxury good. d. be more price-elastic.

d. price-elastic

If someone did not regard health care as very important, often using home remedies and other substitutes, his or her demand curve for health care would most likely be more _____ than that of other people. a. price-inelastic b. nearly vertical c. nearly horizontal d. price-elastic

b. a normal good.

If your income increases and your consumption of bagels increases, other things equal, bagels are considered: a. a positive good. b. a normal good. c. a negative good. d. an inferior good.

b. substitutes; complements

Suppose the cross-price elasticity of demand for butter and margarine is equal to 0.96 but the cross-price elasticity for water and lemons is -0.13. This means that butter and margarine are _____, while water and lemons are _____. a. complements; substitutes b. substitutes; complements c. inelastic goods; elastic goods d. elastic goods; complements

d. cross-price elasticity between cereal and milk is -2

Suppose the price of cereal rose by 25% and the quantity of milk sold decreased by 50%. We know that the: a. cross-price elasticity between cereal and milk is -0.5. b. price elasticity of demand for milk is 2. c. cross-price elasticity of demand between cereal and milk is 2. d. cross-price elasticity between cereal and milk is -2

c. Textbooks are a necessity.

The demand for textbooks is price-inelastic. Which of the following would explain this? a. Many alternative textbooks can be used as substitutes. b. Students have a lot of time to adjust to price changes. c. Textbooks are a necessity. d. Textbook purchases consume a large portion of most students' income.

d. $209; $204.25

When the price of chocolate-covered peanuts decreases from $1.10 to $0.95, the quantity demanded increases from 190 bags to 215 bags. If the price is $1.10, total revenue is _____, and if the price is $0.95, total revenue is _____. a. $236.50; $209 b. $180.50; $209 c. $209; $236.50 d. $209; $204.25

a. inelastic; elastic

You manage a nightclub, and lately revenues have been disappointing. Your bouncer suggests that raising drink prices will increase revenues, but your bartender suggests that decreasing drink prices will increase revenues. You aren't sure who is right, but you do know that your bouncer thinks the demand for drinks is _____ and your bartender thinks the demand for drinks is _____. a. inelastic; elastic b. elastic; inelastic c. elastic; elastic d. inelastic; inelastic