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Introduction to Economics: In class exercise - part 2 - Chapter 4 Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The cross elasticity of demand is calculated as the percentage change in the 1) _______ A) price of one good divided by the percentage change in the price of another good. B) quantity demanded of one good divided by the percentage change in the price of another good C) price of one good divided by the percentage change in the quantity demanded of another good. D) quantity demanded of one good divided by the percentage change in the quantity demanded of another good…show more content…
13) An increase in Abigail 's income decreases her demand for used cars. For her, used cars are 13) ______ A) a complement to any good. B) a normal good. C) a substitute good. D) an inferior good. 14) If when income increases by 2 percent and the price does not change, the quantity of airplane travel demanded increases by 6 percent, then the income elasticity of demand of airplane travel is ________. 14) ______ A) 0 B) 3.00 C) negative D) 0.33 15) Duke increased his spending on steak from $7 to $11 per week because of a 12 percent salary increase, so his 15) ______ A) price elasticity of demand for steak is 1.37. B) income elasticity of demand for steak is 3.7. C) income elasticity of demand for steak is 1.37. D) price elasticity of demand for steak is 3.7. 16) A normal good is defined as a good for which the demand curve 16) ______ A) is perfectly price elastic. B) slopes downward to the right. C) shifts rightward as income increases. D) shifts leftward as income increases. 17) When Sam 's annual income was only $15,000, he purchased 50 pounds of bananas a year. When his income rose to $18,000, he purchased 55 pounds a year. Therefore, 17) ______ A) his income elasticity and price elasticity of demand for bananas are both greater than one. B) for Sam bananas

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