If we wanted to prove that macaroni is an inferior good, we would test the __________ of macaroni and get a __________.
a. cross-price elasticity; negative number
b. income elasticity; number less than 1
c. income elasticity; positive number
d. price elasticity of demand; number greater than negative 1
e. income elasticity; negative number
QUESTION 2Demand for a necessity, such as food, is
a. both income and price inelastic
b. income inelastic and price elastic
c. income elastic and price inelastic
d. both income and price elastic
e. income elastic and perfectly price inelastic
QUESTION 3As the economy recovers from a recession, we should expect that
a. demand for inferior goods will fall and demand for normal goods will rise
b. demand for both inferior and normal goods will rise
c. demand for inferior goods will rise and demand for normal goods will fall
d. demand for both inferior and normal goods will fall
e. demand for complements will fall
QUESTION 4An indication that the economy is in recession, e.g., a rise in the number of used clothing stores for babies, suggests that
a. used clothes for babies are a necessity
b. used clothes for babies are an inferior good
c. used clothes for babies are a normal good
d. new clothes for babies are a luxury
e. used clothes for babies have price-elastic demand
QUESTION 5An inferior good is
a. any good of low quality
b. one that consumers buy less of as the price rises
c. one that consumers buy less of as their income rises
d. one that has few substitutes
e. any good made with inexpensive labor
QUESTION 6Suppose the income elasticity of demand for a private college education is equal to 1.5 . This means that
a. every 1 increase in income provides an incentive for a 1.50 increase in expenditures on private college education
b. every 1.50 increase in income provides an incentive for a 1 increase in expenditures on private college education
c. a 10 percent increase in income causes a 15 percent increase in the demand for a private college education
d. a 15 percent increase in income causes a 10 percent increase in the demand for a private college education
e. a 10 percent decrease in private college tuition will have a large enough income effect to increase spending on private college education by 15 percent
QUESTION 7For which of the following medical goods or services is the income elasticity of demand likely to be largest?
a. emergency services after a car accident
b. measles shots
c. physical examinations for life insurance applications
d. medical tests to diagnose specific symptoms
e. face-lifts
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