Question

Last year, Shelley bought 6 pairs of designer jeans when her income was $40,000. This year, her income is $50,000, and she purchased 10 pairs of designer jeans. Holding other factors constant, it follows that Shelley

	a.	considers designer jeans to be an inferior good.
	b.	considers designer jeans to be a necessity.
	c.	has a low price elasticity of demand for jeans.
	d.	considers designer jeans to be a normal good.

QUESTIONm 23

1. Cross-price elasticity of demand measures how

   	a.	the price of one good changes in response to a change in the price of another good.
   	b.	the quantity demanded of one good changes in response to a change in the price of another good.
   	c.	strongly normal or inferior a good is.
   	d.	the quantity demanded of one good changes in response to a change in the quantity demanded of another good.

1 points   

QUESTION 24

1. The cross-price elasticity of demand can tell us whether goods are

   	a.	normal or inferior.
   	b.	elastic or inelastic.
   	c.	luxuries or necessities.
   	d.	complements or substitutes.

1 points   

QUESTION 25

1. If the cross-price elasticity of two goods is negative, then the two goods are

   	a.	necessities.
   	b.	normal goods.
   	c.	inferior goods.
   	d.	complements.

Answer 1

Q1

Option d

considers designer jeans to be a normal good.

The increase in income increases demands desiner jeans so the good is normal good because it has the positive relationship between demand and the income.

Q23

option b

the quantity demanded of one good changes in response to a change in the price of another good.

the cross-price elasticity of demand measures sensitiveness of quantity changes of one good because of change in the price of other good

Q24

Option d

complements or substitutes.

the two goods are complements if the cross price elasticity is negative and the two goods are substitutes if the cross-price elasticity of demand is positive

Q25

Option d

complements.

the increase in the price of one good decreases demands other goods because both goods are used together and in proportion to the increased price decreases the quantity of both goods.