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Suppose we observe the demand for hats decreases when consumers' income increases. Using only this information we could infer that A. the demand for hats is price unit elastic. B. the demand for hats is price inelastic. C. hats are substitutes for other goods. D. hats are normal goods. E. hats are inferior goods. Total Cost (S) Price ($) Quantity Demanded 24 0 21 1 18 D2 1513 12 1 4 28 33 40 49 60

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29 Apr 2018

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Related questions

*Please provide the answer but also explain what is inelastic, elastic,unitary elastic

*Please explain elasticity of demand values

*Please explain what is an inferior good, how to obtain the answer.



1) If the price of gasoline increases 10% and quantity demanded decreases by 5%, then the demand curve for gasoline is:

A) inelastic.

B) elastic.

C) unitary elastic.

D) a perfect substitutable good.

2) If a good has an elasticity of demand of 21, then we say the good is:

A) highly inelastic.

B) unitary elastic. C) not elastic.

D) highly elastic.

3) For inferior goods, when an individual's income decreases, quantity demanded for these goods increases.

A) True

B) False

1. When demand is inelastic, a decrease in price will cause
 
a. an increase in total revenue.
b. a decrease in total revenue.
c. no change in total revenue but an increase in quantity demanded.
d.no change in total revenue but a decrease in quantity demanded.
 
2. For which of the following types of goods would the income elasticity of demand be positive and relatively large?
 
a. all inferior goods
b. all normal goods
c. goods for which there are many complements
d. luxuries
 
3. Which of the following should be held constant when calculating the income elasticity of demand?
 
a. the quantity of the good demanded
b. the price of the good
c. income
d. All of the above should be held constant.
 
4. Suppose goods A and B are substitutes for each other. We would expect the cross-price elasticity between these two goods to be
 
a. positive.
b. negative.
c. either positive or negative. It depends on whether A and B are normal goods or inferior goods.
d. either positive or negative. It depends on whether the current price level is on the elastic or inelastic portion of the demand curve.
 
5. As the price elasticity of supply increases, the supply curve
 
a. becomes flatter
b. becomes steeper
c. becomes downward sloping.
d. shifts to the right.

 

Answer the following two questions from this Chapter.

1.A clothing producer has determined that the price elasticity of demand for its clothing is 3.2. Based on this information, what should it do to increase total revenue?

Select one:

a. decrease price

b. increase price

c. keep price the same

d. need more information to answer the question

2. If quantity demanded increases by 60% when price decreases by 40%, we can conclude that the good is:

Select one:

a. inelastic

b. elastic

c. normal

d. inferior

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