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Chapter 3 PALP Flashcards | StudBud
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Chapter 3 PALP
Chapter 3 PALP
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26 cards
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Questions
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Answers
1
drop in compact disc price shifts D curve for prerecorded tapes to left this means compact discs and prerecorded tapes
inferior goods
normal goods
substitutes
complements
2
The demand for a good increases when the price of a substitute ___ and also increases when the price of a complement___.
rises; falls
falls; falls
falls; rises
rises; rises
3
Normal goods are those for which demand decreases as
the good's own price rises
the price of a complement falls
income decreases
the price of a substitute falls
4
The demand curve for a normal good shifts leftward if income ________ or the expected future price ________.
decreases; rises
increases; rises
decreases; falls
increases; falls
5
A normal good is a good for which
demand decreases when income increases
there are very few complements
there are few substitutes
demand increases when income increases
6
A substitute is a good
of higher quality than another good
that is not used in place of another good
that can be used in place of another good
of lower quality than another good
7
In the figure above, which movement reflects an increase in the price of a complement for fruit snacks?
from point a to point d
from point a to point b
from point a to point c
from point a to point e
8
A good with a vertical demand curve has a demand with
varying elasticity
unit elasticity
infinite elasticity
zero elasticity
9
Demand is inelastic if
the good in question has close substitutes
a leftward shift of the supply curve raises the total revenue
large shifts of the supply curve lead to only small changes in price.
10
20 % increase in the Q of pizza demanded results from 10 % decline in its price. The PED for pizza is
2.0
20.0
10.0
0.5
11
The more substitutes available for a product,
the larger is its income elasticity of demand
the smaller is its price elasticity of demand
the larger is its the price elasticity of demand
the smaller is its income elasticity of demand
12
A normal good is a good for which demand
decreases when population increases
increases when income increases
increases when population increases
decreases when income increases
13
rise in P of cabbage from $14 to $18,caused by shift of the D curve,increases the QS from 4,000 to 6,000 bushels.The PES
0.8
1.0
1.75
0.6
14
A vertical supply curve indicates an elasticity of supply that equals
0
-1
infinity
1
15
Loy's Y rose from $94o to $1,060 per week.So,she decides to purchase 12 % more lettuce.The YED of Loy's D for lettuce is
1.00
1.33
0.94
0.75
16
10 % decrease in income decreases the QD of compact discs by 3 %.The YED for compact discs is
-0.3
10.0
3.3
0.3
17
Inferior goods are those for which demand increases as
the price of a substitute rises
income decreases
income increases
the price of a substitute falls
18
If income decreases or the price of a complement rises,
there is a downward movement along the demand curve for the good
the demand curve for a normal good shifts leftward
the demand curve for a normal good shifts rightward
there is an upward movement along the demand curve for the good
19
Of the following, which one is most likely to have a negative income elasticity of demand?
frozen yogurt
inter-city bus travel
tennis balls
shoes
20
In the figure above, which movement reflects an increase in income if fruit snacks are an inferior good?
from point a to point b
from point a to point c
from point a to point d
from point a to point e
21
If income increases or the price of a complement falls,
the supply curve of a normal good shifts rightward
the demand curve for a normal good shifts rightward
the demand curve for a normal good shifts leftward
the supply curve of a normal good shifts leftward
22
Which of the following pairs of goods are most likely substitutes?
cola and lemon lime soda
peanut butter and gasoline
compact discs and compact disc players
lettuce and salad dressing
23
Suppose people buy more of good 1 when the price of good 2 falls. These goods are
inferior
complements
normal
substitutes
24
As the opportunity cost of a good decreases, people buy
more of that good and also more of its complements
more of that good but less of its complements
less of that good and also less of its complements
less of that good but more of its complements
25
A complement is a good
of lower quality than another good
used in conjunction with another good
of higher quality than another good
used instead of another good
26
People buy more of good 1 when the price of good 2 rises. These goods are
inferior goods
complements
substitutes
normal goods
