11) Goods are ________ when the income elasticity of demand is positive.
A) complements
B) elastic
C) inferior
D) substitutes
E) normal
12) If the price of a Brita water filtration system increases and the quantity demanded of bottled water increases, then these two goods are
A) substitutes.
B) complements.
C) normal goods.
D) inferior goods.
E) inelastic goods.
13) The cross elasticity of demand for butter and margarine is likely to be
A) positive because they are substitutes.
B) positive because they are complements.
C) negative because they are substitutes.
D) negative because they are complements.
E) positive because they are normal goods.
14) Which of the following is correct?
A) The cross elasticity of demand for substitute goods is positive.
B) The cross elasticity of demand for substitute goods is negative.
C) The cross elasticity of demand equals the percentage change in demand divided by the percentage change in income.
D) The income elasticity of demand for a normal good is negative.
E) The cross elasticity of demand for normal goods is positive.
15) If the cross elasticity of demand between good A and good B is negative, then a decrease in the price of good A results in
A) an increase in the demand for good B.
B) a decrease in the demand for good B.
C) a movement downward along the demand curve for good B.
D) an increase in the supply of good B.
E) a decrease in the supply of good B.
16) Patrick lives near two gas stations, Exxon and Shell. If Exxon decreases the price of gas, we predict that the quantity of gasoline demanded at Shell will
A) decrease because Exxon and Shell gas are complements.
B) decrease because Exxon and Shell gas are substitutes.
C) increase because Exxon and Shell gas are substitutes.
D) increase because Exxon and Shell gas are complements.
E) not change Exxon and Shell are different brands of gasoline.
17) The cross elasticity of demand for strawberry jelly and grape jelly is likely to be
A) positive because they are substitutes.
B) positive because they are complements.
C) negative because they are substitutes.
D) negative because they are complements.
E) negative because they are inferior goods.
18) If a lower price for a Pepsi decreases the demand for a Coke, the cross elasticity value for Pepsi and Coke is
A) definitely negative.
B) definitely equal to zero.
C) definitely positive.
D) definitely greater than one.
E) possibly negative, positive, or zero, but there is not enough information to decide.
19) If the cross elasticity of demand between Coke and Pepsi is 2.02, then Coke and Pepsi are
A) complements.
B) substitutes.
C) normal goods.
D) inferior goods.
E) Both answers B and C are correct.
20) If Pepsi goes on sale and decreases its price by 10 percent, and as a result, the quantity demanded of Coca Cola decreases by 5 percent, then Pepsi and Coke are ________ goods.
A) inferior
B) normal
C) substitute
D) complementary
E) unrelated
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