SOLVED

31) If the cross elasticity of demand for DVD players and DVDs equals -2, then the products are A) unrelated. B) complements. C) inferior goods. D) substitutes. E) normal goods. 32) Tennis balls and tennis rackets are complements. If a 3 percent change in the price of a tennis racket leads to a 9 change in the quantity of tennis balls demanded, the cross elasticity of demand equals A) 3. B) -3. C) 1/3. D) -1/3. E) 9. 33) The income elasticity of demand is a measure of A) how demand for a product changes when the price of a substitute or complement product changes. B) how responsive consumers are to changes in the price of a product. C) how responsive suppliers are to changes in the price of a product. D) the extent to which the demand for a good changes when income changes. E) the extent to which the supply of a good changes when the demand changes as a result of a change in income. 34) If the income elasticity of demand for a good is 2, then when income rises 10 percent, the quantity demanded A) increases 2 percent. B) increases 20 percent. C) decreases 2 percent. D) decreases 20 percent. E) increases 12 percent. 35) The income elasticity of demand is A) positive for a normal good. B) zero for an inferior good. C) less than one for an income elastic normal good. D)Â Only answers A and B are correct. E) Answers A, B, and C are correct. 36) The income elasticity of demand is ________ if the good is ________ good. A) positive; a normal B) positive; an inferior C) negative; a normal D) less than one; an inferior E) positive; a substitute 37) Assume that it is predicted that for the years after you graduate from college, the entire economy will experience a long period of prosperity when incomes grow rapidly. What type of industry would be the best for you to find employment if this prediction is correct? An industry that produces a product that is A) income elastic. B) income inelastic. C) inferior. D) a substitute good. E) none of these industries 38) Which of the following statements is correct? The A) income elasticity of demand for inferior goods is positive. B) cross elasticity of demand for substitutes is negative. C) income elasticity of demand for normal goods is positive. D) cross elasticity of demand for complements is positive. E) income elasticity of demand for inferior goods is zero. 39) The income elasticity of demand for skiing trips to Vermont is greater than one. Thus a trip to Vermont for skiing is ________ good. A) a normal B) an inferior C) a unit elastic D) a price elastic E) a price inelastic 40) People eat at restaurants less often when their incomes fall because of a recession. Eating at restaurants must be A) an inferior good. B) a normal good. C) a complement to other goods. D) a substitute for other goods. E) an inelastic good.