AK4.2

# AK4.2 - Rice University ECON 211 Fall 2009 Problem Set...

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c. In a recipe for chocolate chip cookies, two of the ingredients are butter and eggs. Margarine may be used in place of butter. Based on this information, one would expect that (a) the price elasticity of demand for butter is greater than that for eggs. (b) the price elasticity of demand for butter is less than that for eggs. (c) the price elasticity of demand for butter is equal to that for eggs. (d) the price elasticity of demand for butter and eggs is necessarily unitary Answer a) d. Goods that are considered to be economic necessities, such as chicken and milk, tend to have an income elasticity that is (a) greater than one. (b) between zero and one. (c) between zero and –1. (d) less than –1. Answer b) e. Suppose the elasticity of supply for televisions is .57 in the short run and 1.98 in the long run. This implies that (a) the supply of TVs is more elastic in the short run than in the long run.
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