37) The cross-price elasticity of demand measures the
A) absolute change in the quantity demanded of one good divided by the absolute change in the price of another good.
B) percentage change in the quantity demanded of one good divided by the percentage change in the price of another good.
C) percentage change in the price of one good divided by the percentage change in the quantity demanded of another good.
D) percentage change in the quantity demanded of one good in one location divided by the price of the same good in another location.
38) The cross-price elasticity of demand between Coca-Cola and Pepsi-Cola is calculated by dividing
A) the percentage change in quantity demanded of Coca-Cola by the percentage change in the quantity demanded of Pepsi-Cola.
B) the percentage change in the price of Pepsi-Cola by the percentage change in quantity demanded of Coca-Cola.
C) the percentage change in the price of Coca-Cola by the percentage change in the price of Pepsi-Cola.
D) the percentage change in the quantity demanded of Coca-Cola by the percentage change in the price of Pepsi-Cola.
39) In order to prove that Motrin and Ibuprofen are substitutes, one should measure the ________ and get a ________.
A) cross-price elasticity; positive number
B) cross-price elasticity; negative number
C) price elasticity of demand; number greater than 1 (in absolute value)
D) price elasticity of demand; number less than 1 (in absolute value)
40) The cross-price elasticity between Gillette razors and a related good is -3.4. What happens to the demand for the related good if the price of Gillette razors falls by 10 percent?
A) The quantity demanded of the related good rises by 3.4 percent.
B) The quantity demanded of the related good falls by 34 percent.
C) The quantity demanded of the related good rises by 34 percent.
D) The quantity demanded of the related good falls by 3.4 percent.
41) If the cross-price elasticity of demand between beer and wine is 0.31, then beer and wine are
A) complements.
B) price inelastic goods.
C) substitutes.
D) necessities.
42) Consider the following pairs of items:
a.shampoo and conditioner
b.iPhones and earbuds
c.a laptop computer and a desktop computer
d.beef and pork
e.air-travel and weed killer
Which of the pairs listed will have a positive cross-price elasticity?
A) a and b only
B) c and d only
C) e only
D) a, b, and c only
43) Which of the following pairs of goods is likely to have a negative cross-price elasticity of demand?
A) pancakes and syrup
B) hot dogs and hamburgers
C) orange juice and grapefruit juice
D) peanuts and cat food
44) When the price of tortilla chips rose by 10 percent, the quantity of tortilla chips sold fell 4 percent, and the sale of dips (like salsa and bean dip) fell 8 percent. This set of facts indicates that
A) the cross-price elasticity between tortilla chips and dips is 0.8, so the two are substitutes.
B) the cross-price elasticity between tortilla chips and dips is -0.4, so the two are complements.
C) the cross-price elasticity between tortilla chips and dips is -0.8, so the two are complements.
D) the cross-price elasticity between tortilla chips and dips is 0.4, so the two are substitutes.
45) Suppose the cross-price elasticity of demand between DVDs at Amazon.com and DVDs at Buy.com is 3.5. Based on this information, predict what happens when Amazon.com lowers its DVD prices by 10 percent.
A) The quantity of DVDs demanded on Amazon.com will increase by 35 percent.
B) The quantity of DVDs demanded on Buy.com will increase by 35 percent.
C) The quantity of DVDs demanded on Amazon.com will decrease by 35 percent.
D) The quantity of DVDs demanded on Buy.com will decrease by 35 percent.
46) During an economic expansion as consumer incomes rise, holding everything else constant,
A) the demand for most goods, except luxuries, will rise.
B) the demand for luxuries will rise while the demand for inferior goods will fall.
C) the demand for luxuries and inferior goods will rise.
D) the prices of luxuries will fall while the prices of inferior goods will rise.
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