Question

27) Suppose the price elasticity of supply for shampoo is 20. If the price of shampoo increases by 0.7%, what would we expect to happen to the quantity of shampoo supplied?

a) Increase by 27%
b) Increase by 14%)
e) Increase by 13%
d) Decrease by 13%
28)
e) Decrease by 27%
If pasta is a Giffen good, then....
a) pasta is also a normal good.
b) pasta is also a luxury good.
e) an decrease in the price of pasta will increase the quantity demanded. d) an increase in the price of pasta will increase the quantity demanded. e) pasta must make up a small portion of consumers' total expenditures.
20)
An inferior good in which the income effect dominates the substitution effect is called....
a) a normal good.
b) a luxury good.
30)
a) a Giffon good.
d) a mass-produced good.
e) a favored good.
The cross elasticity of demand measures the responsiveness of the quantity demanded of a particular good to changes in the prices of
a) its complements but not its substitutes.
b) Its substitutes but not ita complements.
c) its substitutes and its complements.
d) neither its substitutes nor its complements. e) None of the above..

Answer 1

In question 27, the price elasticity of supply for shampoo is given as 20, and the price of shampoo increases by 0.7%. The expected change in the quantity of shampoo supplied can be determined using the concept of price elasticity of supply. However, the specific percentage change in quantity supplied is not provided, so a precise answer cannot be given based on the given information.

In question 20, an inferior good in which the income effect dominates the substitution effect is referred to as a Giffen good. It is not classified as a normal good, luxury good, mass-produced good, or favored good.

In question 30, the cross elasticity of demand measures the responsiveness of the quantity demanded of a particular good to changes in the prices of its substitutes and complements. The correct answer is that the cross elasticity of demand measures the responsiveness to changes in both substitutes and complements.

In question 27, without the specific percentage change in quantity supplied, we cannot determine the exact outcome based on the given information. The price elasticity of supply of 20 suggests that the quantity supplied is highly responsive to changes in price, but the specific percentage change in quantity supplied cannot be calculated without additional data.

In question 28, the relationship between pasta being a Giffen good and other characteristics is not specified. While pasta being a Giffen good indicates that the quantity demanded increases as the price increases, it does not imply whether pasta is a normal good, luxury good, or how price changes affect quantity demanded.

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