Elasticity

To determine whether two goods are substitutes or complements, an economist would estimate the

• Price elasticity of demand.
• Income elasticity of demand.
• Price elasticity of supply.
• Cross-elasticity of demand

You are on a committee that is considering ways to raise money for your House's fundraiser. You would recommend increasing the price of raffe tickets only if you thought the demand curve for these tickets was

• Inelastic 
• Elastic 
• Unit Elastic 
• Perfectly Elastic 

Which of the following is most likely to have a negative income elasticity of demand?

•  Fancy restaurant meals.
• Vacations.
• Day-old bakery goods at a discount bakery.
• New cars.

Income elasticity measures

• how a good's quantity demanded responds to change in the goods price.
  
• how a good's quantity demanded responds to change in the price of another good. 
• how a good's quantity demanded responds to change in buyers' incomes.
  
•  how a good's quantity demanded responds to producers' incomes. 

The cross elasticity of demand between Coca-Cola and Pepsi is 

• positive, that is, Coke and Pepsi are complements. 
• negative, that is, Coke and Pepsi are complements. 
• positive, that is, Coke and Pepsi are substitutes.
  
• negative, that is, Coke and Pepsi are substitutes. 

The elasticity of supply measures the responsiveness of 

• quantity supplied to changes in price. 
• quantity demanded to changes in supply. 
• quantity supplied to changes in income. 
• quantity supplied to changes in demand. 

The above figure illustrates the demand curve for a good. The good has 

• many substitutes. 
• only one substitute. 
• no substitutes.
  
• only a few substitutes. 

The formula for calculating elasticity of demand is:

• The % change in price over the % change in quantity demanded
• The % change in quantity demanded over the % change in price
• The change in price over the change in quantity demaned
• The change in quantity demanded over the change in price

The supply of perishable good such as bananas is more price _______ than durable goods such as smart phones because of lack of ________ for perishable goods.  

• inelastic, good weather
• elastic, good weather
• inelastic, stock
• elastic, stock

When a factory is running at full capacity, it means all its machinery is ________ utilised and the supply of the good will be price _______. 

• fully, elastic
• fully, inelastic
• under, elastic
• under, inelastic