84-Income_Elasticity_Demand

84-Income_Elasticity_Demand - A. The income elasticity of...

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Student Name: 12 August 2010 Total Possible Marks: 11 Income Elasticity of Demand Complete in pen or pencil and hand into your teacher when ready. Each multiple choice question carries one mark. Select one answer only. 1 1. Income elasticity of demand is defined as 1 2. When demand for a product is income inelastic, the percentage change in quantity demanded is [A]__________ the percentage change in income 1 3. The income elasticity of demand for a normal good is always 1 4. It was estimated in 2003 that milk has an income elasticity of demand of -0.6. What can be concluded about milk from this information? 1 5. An income reduction of 15% causes Geoff to increase his purchases of minced beef by 10%. Which of the following statements is most likely to be correct?
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Unformatted text preview: A. The income elasticity of demand for minced beef is -2/3 and ground beef is a superior good B. The price elasticity of demand for ground beef is -1.5 and ground beef is a normal good C. The income elasticity of demand for minced beef is -2/3 and ground beef is an inferior good D. The price elasticity of demand for ground beef is -2/3 and minced beef is a normal good 6 6. The income elasticity of demand for private dental services, rental movie services, and private (or own) label clothing available in supermarkets have been estimated to be +2.5, +0.8, and -1.5 respectively. Write an answer interpreting these coefficients for income elasticity- 1 -12/08/2010...
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