REVISION QUIZ BE2206

Cross price elasticity of demand is equal to the percentage change in quantity demanded for Product A, divided by:

• the quantity supplied of product B.

• The percentage change in quantity demanded of product B.

• The quantity supplied of product A.

• The percentage change in price of product B.

If the cross price elasticity between apples and oranges is 2, which is correct?

• The two goods are substitutes, and a price increase in one good will cause an increase in the quantity demanded of the other.

• The two goods are complements, and a price increase in one good will cause an increase in the quantity demanded of the other.

• The two goods are substitutes, and a price decrease in one good will cause an increase in the quantity demanded of the other.

• The two goods are independent, and a price increase in one good will cause an increase in the quantity demanded of the other.

The quantity demanded or product A has increased by 12% in response to a 15% increase in price of product B. Calculate the cross elasticity of demand 

• 1.25

• 8

• 0.8

• 2.5

If the PED for microwave oven is 1.5 means

• few subtitutes exists

• 1% decrease in price will lead to a 15% increase in quantity demanded

• 5% decrease in price will lead to a 7.5% increase in quantity demanded

• 10% increase in price will lead to a 150% decrease in quantity demanded

Based on a survey. the income elasticity of demand for a book planner is 0.95. this shows that a book planner is

• luxury goods

• normal goods

• inferior goods

• none of the above

Based on a survey. the income elasticity of demand for a jewellery is 2. this shows that a book planner is

• luxury goods

• normal goods

• inferior goods

• none of the above

Sugar and honey are substitute goods. if the price of sugar rises, what can be expected is the

• demand for honey increase

• demand for honey decrease

which of the following goods and services has the highest elasticity of demand, based on the proportion on income spent on them?

• A haircut

• Iphone

• Toothbrush

• Curry powder

which of the following goods and services has the least elasticity of demand, based on the proportion on income spent on them?

• gold

• Iphone

• Toothbrush

• car

As the price of eggs increases, Shasha's production of cakes

• increases the supply of cakes

• decreases the supply of cakes