Multiple Choice Questions on Income Elasticity
ABBE 1013 MICROECONOMICS
TUTORIAL 5
SECTION A: MULTIPLE-CHOICE QUESTIONS
1. If an increase in income results in an increase in the demand for chicken, then chicken is a/ an ___________________________.
A. neutral good B. luxury good C. normal good D. inferior good
2. Two goods are complements if the ____________________.
A. cross elasticity of demand is negative B. income elasticity of demand is negative C. cross elasticity of demand is positive D. income elasticity of demand is positive
3. If a 5% decrease in the price of AAA brings about a 3% increase in the sales of BBB, then _______________________.
A. the cross elasticity of demand between AAA and BBB is positive B. AAA and BBB are complementary goods C. the price elasticity of demand for both AAA and BBB is inelastic D. AAA and BBB are substitute goods
4. If Ahmad’s salary went up from RM1,200 to RM1,500, while his monthly demand for cigarettes increased from 10 packets to 12 packets, then Ahmad’s income elasticity of demand for cigarettes is considered to be ___________________________________________.
A. elastic B. inelastic C. unit elastic D. indeterminate
5. Cross elasticity of demand measures the responsiveness of changes in the quantity __________ of one good to changes in __________. A. supplied; the price of the same good B. demanded; the price of another good C. demanded; the price of the same good D. demanded; income
6. If the cross elasticity of demand for good A with respect to good B is -2.7, then good A is a/an _____________________. A. normal B. inferior C. substitute for good B D. complementary to good B
7. Income elasticity of demand for a normal good is always ______________________. A. less than zero B. greater than zero C. equal to zero D. less than one
8. An inferior good is
TUTORIAL 5
SECTION A: MULTIPLE-CHOICE QUESTIONS
1. If an increase in income results in an increase in the demand for chicken, then chicken is a/ an ___________________________.
A. neutral good B. luxury good C. normal good D. inferior good
2. Two goods are complements if the ____________________.
A. cross elasticity of demand is negative B. income elasticity of demand is negative C. cross elasticity of demand is positive D. income elasticity of demand is positive
3. If a 5% decrease in the price of AAA brings about a 3% increase in the sales of BBB, then _______________________.
A. the cross elasticity of demand between AAA and BBB is positive B. AAA and BBB are complementary goods C. the price elasticity of demand for both AAA and BBB is inelastic D. AAA and BBB are substitute goods
4. If Ahmad’s salary went up from RM1,200 to RM1,500, while his monthly demand for cigarettes increased from 10 packets to 12 packets, then Ahmad’s income elasticity of demand for cigarettes is considered to be ___________________________________________.
A. elastic B. inelastic C. unit elastic D. indeterminate
5. Cross elasticity of demand measures the responsiveness of changes in the quantity __________ of one good to changes in __________. A. supplied; the price of the same good B. demanded; the price of another good C. demanded; the price of the same good D. demanded; income
6. If the cross elasticity of demand for good A with respect to good B is -2.7, then good A is a/an _____________________. A. normal B. inferior C. substitute for good B D. complementary to good B
7. Income elasticity of demand for a normal good is always ______________________. A. less than zero B. greater than zero C. equal to zero D. less than one
8. An inferior good is