chapter 6 - Name: _ Date: _ Use the following to answer...

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Name: __________________________ Date: _____________ Use the following to answer question 1: 1. (Table: Johnson's Income and Expenditures) Johnson's income elasticity of demand for magazines is: A) negative. B) 0. C) greater than 0 but less than 1. D) 1. 2. The price elasticity of a good will tend to be greater: A) the longer the relevant time period. B) the fewer the number of substitute goods available. C) if it is a staple or necessity with few substitutes. D) if the share of income spent on the good is small. Page 1
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Use the following to answer question 3: Figure: Estimating Price Elasticity 3. (Figure: Estimating Price Elasticity) Between the two prices, P 1 and P 2 , which demand curve has the highest price elasticity (absolute value)? A) D 1 B) D 2 C) D 3 D) D 4 4. If the percentage change in the quantity demanded of a good is greater than the percentage change in income, then this good will have an income elasticity: A) greater than 1 and it is a normal good. B) less than 1 and it is a normal good. C) equal to 1 and it is a normal good. D) less than 1 and it is an inferior good. Page 2
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Use the following to answer question 5: Figure: Demand Curve for Oil 5. (Figure: Demand Curve for Oil) In the figure, the price elasticity of demand between $20 and $21, using the midpoint method, is approximately: A) 0.21. B) 0.49. C) 2.1. D) 4.9. 6. If your purchases of shoes decrease from 11 pairs per year to 9 pairs per year when the price of shirts increases from $8 to $12, then, for you, shoes and shirts are considered: A) inferior goods. B) luxury goods. C)
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chapter 6 - Name: _ Date: _ Use the following to answer...

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