61.Ifthecross-priceelasticityofdemandfortwogoodsis1.25,then
a.thetwogoodsareluxuries.
b.thetwogoodsaresubstitutes.
c.oneofthegoodsisnormalandtheothergoodisinferior.
d.thedemandforoneofthegoodsconformstothelawofdemand,butthedemandfortheothergoodviolatesthelawofdemand.
62.Ifthecross-priceelasticityofdemandfortwogoodsis-4.5,then
a.thetwogoodsaresubstitutes.
b.thetwogoodsarecomplements.
c.oneofthegoodsisnormalwhiletheothergoodisinferior.
d.oneofthegoodsisaluxurywhiletheothergoodisanecessity.
63.SupposethatwhenthepriceofgoodXincreasesfrom$800to$850,thequantitydemandedofgoodYincreasesfrom65to70.Usingthemidpointmethod,thecrosspriceelasticityofdemandisabout
a.-1.2,andXandYarecomplements.
b.-0.1,andXandYarecomplements.
c.0.1,andXandYaresubstitutes.
d.1.2,andXandYaresubstitutes.
64.Lastmonth,sellersofgoodYtookin$100intotalrevenueonsalesof50unitsofgoodY.ThismonthsellersofgoodYraisedtheirpriceandtookin$120intotalrevenueonsalesof40unitsofgoodY.Atthesametime,thepriceofgoodXstayedthesame,butsalesofgoodXincreasedfrom20unitsto40units.WecanconcludethatgoodsXandYare
a.substitutes,andhaveacross-priceelasticityof0.60.
b.complements,andhaveacross-priceelasticityof-0.60.
c.substitutes,andhaveacross-priceelasticityof1.67.
d.complements,andhaveacross-priceelasticityof-1.67.
65.SupposethatwhenthepriceofgoodXfallsfrom$10to$8,thequantitydemandedofgoodYrisesfrom20unitsto25units.Usingthemidpointmethod,thecross-priceelasticityofdemandis
a.-1.0,andXandYarecomplements.
b.-1.0,andXandYaresubstitutes.
c.1.0,andXandYarecomplements.
d.1.0,andXandYaresubstitutes.
66.SupposethatwhenthepriceofgoodXfallsfrom$6to$4,thequantitydemandedofgoodYrisesfrom30unitsto40units.Usingthemidpointmethod,thecross-priceelasticityofdemandis
a.-0.71,andXandYarecomplements.
b.-1.40,andXandYarecomplements.
c.-0.71,andXandYaresubstitutes.
d.-1.40,andXandYaresubstitutes.
67.Supposethecross-priceelasticityofdemandbetweenhotdogsandmustardis-2.00.Thisimpliesthata20percentincreaseinthepriceofhotdogswillcausethequantityofmustardpurchasedto
a.fallby200percent.
b.fallby40percent.
c.riseby200percent.
d.riseby40percent.
68.Supposethecross-priceelasticityofdemandbetweenpeanutbutterandjellyis-2.50.Thisimpliesthata20percentincreaseinthepriceofpeanutbutterwillcausethequantityofjellypurchasedto
a.fallby8percent.
b.fallby50percent.
c.riseby8percent.
d.riseby50percent.
69.Maddypurchases2poundsofbeansand3poundsofricepermonthwhenthepriceofbeansis$2perpound.Shepurchases1poundsofbeansand4poundsofricepermonthwhenthepriceofbeansis$3perpound.Maddy’scross-priceelasticityofdemandforbeansandriceis
a.0.71,andtheyaresubstitutes.
b.-0.71,andtheyarecomplements.
c.1.4,andtheyaresubstitutes.
d.-1.4,andtheyarecomplements.
70.RefertoScenario5-1.WhatcanyoudeduceaboutthetypeofgoodPatty’sPizzaisandabouttherelationshipbetweenPatty’sPizzaandSue’sSubs?
a.Patty’sPizzaisanormalgoodandPatty’sPizzaandSue’sSubsaresubstitutes.
b.Patty’sPizzaisanormalgoodandPatty’sPizzaandSue’sSubsarecomplements.
c.Patty’sPizzaisaninferiorgoodandPatty’sPizzaandSue’sSubsaresubstitutes.
d.Patty’sPizzaisaninferiorgoodandPatty’sPizzaandSue’sSubsarecomplements.
71.RefertoScenario5-1.Usingthemidpointmethod,whatistheincomeelasticityofdemandforpizzaandwhatdoesthevalueindicateaboutthedemandforpizza?
a.Theincomeelasticityis0.18sopizzaisanormalgood.
b.Theincomeelasticityis-1sopizzaisaninferiorgood.
c.Theincomeelasticityis1sopizzaisunitaryelastic.
d.Theincomeelasticityis1sopizzaisanormalgood.
72.RefertoScenario5-1.Usingthemidpointmethod,thecrosspriceelasticityofdemandis
a.about0.22,andthetwogoodsaresubstitutes.
b.about-0.005,andthetwogoodsarecomplements.
c.1,andthetwogoodsaresubstitutes.
d.1,andthetwogoodsareunitaryelastic.
73.RefertoScenario5-2.Usingthemidpointmethod,ifthepriceofgoodXisconstantat$10andthepriceofgoodYdecreasesfrom$10to$8,thecrosspriceelasticityofdemandisabout
a.0.57,andXandYaresubstitutes.
b.-0.22,andXandYarecomplements.
c.-0.80,andXandYarecomplements.
d.-2.57,andXandYarecomplements.
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