Month: July 2018

The income elasticity of demand for restaurant meals is 1.61. So……. ?

Select ONE answer:

1. if income increases by 16.1 percent, the quantity demanded of restaurant meals will
   increase by 10 percent.
2. if income increases by 10 percent, the quantity demanded of restaurant meals will increase
   by 16.1 percent.
3. restaurant meals are an income elastic normal good.
4. Both answers B and C are correct.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Economics KS5 classes.

The answer is 4

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The income elasticity of demand is a measure of the responsiveness of …..?

Select ONE answer:

1. the consumer’s income to a change in the price of the goods he or she consumes.
2. the quantity of a good demanded to changes in another good’s price.
3. the quantity of a good demanded to changes in its price.
4. the quantity of a good demanded to changes in income.

Explain how changes in real incomes may cause a shift in the demand curve:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Economics KS5 classes.

The answer is 4

This work is licensed under a Creative Commons Attribution 4.0 International License.

A negative value for the cross elasticity of demand between two goods indicates

Select ONE answer:

1. that one of the goods is normal and the other is inferior.
2. that the goods are substitutes.
3. that the goods are complements.
4. that each good is price inelastic.

Explain how changes in the prices of substitutes and complementary goods may cause a shift in the demand curve:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Economics KS5 classes.

The answer is 3

This work is licensed under a Creative Commons Attribution 4.0 International License.

In the above figure, if the two goods, A and B, are complements, which of the following is true?

Select ONE answer:

1. The cross elasticity of demand between them is positive.
2. The shift from S0 to S1 for good A lead to the shift from D0 to D1 for good B.
3. The shift from D0 to D1 for good B lead to a shift from S0 to S1 for good A.
4. The law of demand is at work in both markets.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Economics KS5 classes.

The answer is 2

This work is licensed under a Creative Commons Attribution 4.0 International License.

If the cross elasticity of demand is -5 between french fries and orange drink, then french fries

Select ONE answer:

1. and orange drink are substitutes.
2. are a normal good and orange drink is an inferior good.
3. and orange drink are complements.
4. are an inferior good and orange drink is a normal good.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Economics KS5 classes.

The answer is 3

This work is licensed under a Creative Commons Attribution 4.0 International License.