C.drop, elastic

d.drop, unit elastic

47.

Suppose that consumers' incomes rise by 3%, and that this causes the quantity demanded for a good to increase by 4.5%. What is the income elasticity of demand?

A.1.50

b.0.67

c.-1.50

d.-0.67

48.

Suppose that a good has an income elasticity of demand of -2.0. This means that the good is:

a.normal.

B.inferior.

c.a substitute.

d.a complement.

49.

If two goods have a cross-price elasticity of demand of -0.8. This means that these goods are:

a.normal.

b.inferior.

c.substitutes.

D.complements.

50.

The price of good A increases from $4.50 to $5.50. This causes the quantity demanded of good B to increase from 900 to 1100 units per month. Find the cross price elasticity of demand using the Mid-Point method.

a.-1.0

b.+2.0

c.+1.0

d.-2.0

Supply, Demand, and Government Policies

51.

Suppose that a regulation is in place that does not allow the price of a good to exceed $5. If this price is above the equilibrium price in the market, this would be an example of a:

a.binding price ceiling.

B.not binding price ceiling.

c.binding price floor.

d.not binding price floor.

52.

Suppose that a regulation is in place that does not allow the price of a good to fall below $10. If this price is above the equilibrium price in the market, this would be an example of a:

a.binding price ceiling.

b.not binding price ceiling.

C.binding price floor.

d.not binding price floor.

53.

Suppose that a regulation is in place that does not allow the price of a good to exceed $5. If this price is below the equilibrium price in the market, this would be an example of a:

A.binding price ceiling.

b.not binding price ceiling.

c.binding price floor.

d.not binding price floor.

54.

If a price floor is in place and it is binding, the market will:

a.remain in equilibrium, unaffected by the price floor.

b.experience a shortage.

C.experience a surplus.

d.adjust its equilibrium point toward the price floor.

55.

If a price ceiling is in place and it is binding, the market will:

a.remain in equilibrium, unaffected by the price floor.

B.experience a shortage.

c.experience a surplus.

d.adjust its equilibrium point toward the price floor.

56.

If a price floor is in place and it is not binding, the market will:

A.remain in equilibrium, unaffected by the price floor.

b.experience a shortage.

c.experience a surplus.

d.adjust its equilibrium point toward the price floor.

57.

If a tax is imposed on buyers of a good, the ________ curve of the good will shift ________ by the amount of the tax.

a.demand, upward

B.demand, downward

c.supply, upward

d.supply, downward

58.

If a tax is imposed on sellers of a good, the ________ curve of the good will shift ________ by the amount of the tax.

a.demand, upward

b.demand, downward