Question : 51) If a product an inferior good, then its income : 1241510

51) If a product is an inferior good, then its income elasticity of demand is

A) zero.

B) positive.

C) negative.

D) indeterminate.

E) undefined.

52) If a good is inferior, then it has an income elasticity of demand that is

A) equal to zero.

B) greater than zero.

C) less than zero.

D) greater than one.

E) undefined.

53) If a 5 percent increase in income brings about a 10 percent decrease in the demand for a good, then the

A) good is a normal good.

B) good is an inferior good.

C) income elasticity of demand is 0.5.

D) income elasticity of demand is 2.0.

E) income elasticity of demand is 5.0.

54) If a 10 percent increase in income leads to a 5 percent decrease in the demand for a good, the income elasticity of demand equals ________ and the good is ________ good.

A) 1/2; a normal

B) -1/2; an inferior

C) 2; a normal

D) -2; a normal

E) -5; an inferior

55) Joe receives a 20 percent increase in his income from his part time job and as a consequence decreases his consumption of Ramen noodles by 10 percent. Hence to Joe, Ramen noodles are

A) a normal good with a price elasticity of demand of 0.5.

B) a substitute good with a cross elasticity of 0.5.

C) a good with a price elasticity of supply of -0.5.

D) an inferior good with an income elasticity of -0.5.

E) an inferior good with an income elasticity of -2.0.

56) If a 5 percent decrease in income leads to a 15 percent decrease in the demand for a good, the income elasticity of demand equals

A) -1/3 and the good is an inferior good.

B) 1/3 and demand for the good is income elastic.

C) 3 and the good is a normal good.

D) -3 and the demand for the good is income inelastic.

E) 3 and the good is an inferior good.

57) When income increases from $20,000 to $30,000 the quantity of inter-city bus trips taken per year decreases from 10 to 8. Hence

A) inter-city bus trips are a normal good.

B) the income elasticity of demand for inter-city bus trips is -1.8.

C) the income elasticity of demand for inter-city bus trips is -0.56.

D) Both answers A and B are correct.

E) Both answers A and C are correct.

58) The income elasticity of demand for foreign travel

A) is likely to be smaller than the income elasticity of demand for food.

B) is likely to be larger than the income elasticity of demand for food.

C) cannot be compared to the income elasticity of demand for food.

D) is likely to be inelastic.

E) is likely to be negative.

59) The lower the level of income in a country, the

A) less income elastic is the demand for food.

B) more income elastic is the demand for food.

C) more negative the income elasticity of the demand for food.

D) Both answers A and C are correct.

E) None of the above is correct.

60) The measure used to determine whether two products are complements or substitutes is called the

A) price elasticity of supply.

B) cross elasticity of demand.

C) price elasticity of demand.

D) income elasticity.

E) substitute elasticity of demand.