Tackle the Test: Multiple-Choice Questions

1. Question

   If the cross-price elasticity between two goods is negative, this means that the two goods are

   A.

   substitutes.

   B.

   complements.

   C.

   normal.

   D.

   inferior.

   E.

   luxuries.

   If the cros

2. Question

   If Kylie buys 200 units of good X when her income is $20,000 and 300 units of good X when her income increases to $25,000, her income elasticity of demand, using the midpoint method, is

   A.

   0.06.

   B.

   0.5.

   C.

   1.65.

   D.

   1.8.

   E.

   2.00.

   If Kylie buys 200 units of good X when her income is $20,000 and 300 units of good X when her income increases to $25,000, her income elasticity of demand, using the midpoint method, is

3. Question

   The income elasticity of demand for a normal good is

   A.

   zero.

   B.

   1.

   C.

   infinite.

   D.

   positive.

   E.

   negative.

   The income elasticity of demand for a normal good is

4. Question

   A perfectly elastic supply curve is

   A.

   positively sloped.

   B.

   negatively sloped.

   C.

   vertical.

   D.

   horizontal.

   E.

   U-shaped

   A perfectly elastic supply curve is

5. Question

   Which of the following leads to a more inelastic price elasticity of supply?

   
   

   
   

   1. the use of inputs that are easily obtained

      
      
   
   

   2. a high degree of substitutability between inputs

      
      
   
   

   3. a shorter time period in which to supply the good

      
      
   
   

   A.

   I only

   B.

   II only

   C.

   III only

   D.

   I and II only

   E.

   I, II, and III

   Which of the following leads to a more inelastic price elasticity of supply?