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If the price elasticity of supply is 0.5 and the quantity supplied decreases by 6%,then the price must have decreased by 3%.

A) True
B) False

Correct Answer

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If we observe that when consumers' incomes rise by 10%,the quantity demanded of ice cream increases by 5%,then ice cream is an inferior good.

A) True
B) False

Correct Answer

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If a t-shirt manufacturer supplies 1,000 t-shirts per week when the price of t-shirts is $10 and supplies 1,200 t-shirts per week when the price of t-shirts is $12,the price elasticity of supply is 2.

A) True
B) False

Correct Answer

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The income elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price.

A) True
B) False

Correct Answer

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Supply tends to be more elastic in the short run and more inelastic in the long run.

A) True
B) False

Correct Answer

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Necessities tend to have elastic demands,whereas luxuries tend to have inelastic demands.

A) True
B) False

Correct Answer

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The cross-price elasticity of garlic salt and onion salt is -2,which indicates that garlic salt and onion salt are substitutes.

A) True
B) False

Correct Answer

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Suppose that when the price rises by 10% for a particular good,the quantity demanded of that good falls by 20%.The price elasticity of demand for this good is equal to 2.0.

A) True
B) False

Correct Answer

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The demand for gasoline will respond more to a change in price over a period of five weeks than over a period of five years.

A) True
B) False

Correct Answer

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If we observe that when the price of chocolate increases by 10%,quantity demanded falls by 5%,then the demand for chocolate is price inelastic.

A) True
B) False

Correct Answer

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Cross-price elasticity is used to determine whether goods are inferior or normal goods.

A) True
B) False

Correct Answer

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The demand for bread is likely to be more elastic than the demand for solid-gold bread plates.

A) True
B) False

Correct Answer

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If the price elasticity of supply is 2 and the quantity supplied decreases by 6%,then the price must have decreased by 3%.

A) True
B) False

Correct Answer

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Normal goods have negative income elasticities of demand,while inferior goods have positive income elasticities of demand.

A) True
B) False

Correct Answer

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A government program that reduces land under cultivation hurts farmers but helps consumers.

A) True
B) False

Correct Answer

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Drug interdiction,which reduces the supply of drugs,may decrease drug-related crime because the demand for drugs is inelastic.

A) True
B) False

Correct Answer

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If the cross-price elasticity of demand for two goods is negative,then the two goods are substitutes.

A) True
B) False

Correct Answer

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Helen's Honey Hut supplies 20 jars of honey per week when the price of honey is $6 per jar and supplies 30 jars per week when the price of is $8 per jar,so the price elasticity of supply over this price range is 1.4.

A) True
B) False

Correct Answer

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