7/31/2019 Demand Analysis Practise Questions

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DEMAND ANALYSIS

1. State in your own words what each of the following phrases means:

a. The income elasticity of demand for automobiles is +3. What does thenumber +3 tell you about automobiles?

b. The cross elasticity of demand between automobiles and gasoline is -3.What does the number 3 tell you about automobiles and gasoline?

2. Test Your Understanding

In each of the following cases, state whether(1) There is a movement along the demand curve for Indian automobiles,(2) The demand curve for Indian automobiles will shift to the right, or

(3) The demand curve for Indian automobiles will shift to the left:a. The price of gasoline rises ___________denote 1,2 or 3_____________b. The price ofIndian automobiles rises ________________________c. The price of Japanese automobiles rises ________________________d. Buyers' incomes fall ________________________e. Buyers find that Indian automobiles are of higher quality

__________________f. Mexican automobile buyers are now able to buy Indian automobiles

_________g. Buyers expect that the price ofIndian automobiles will rise next year

_________

Practice Quiz

3. If the price of DVRs fell and, as a result, the demand for VHS recordersfell, we could conclude that VHS recorders and DVRs are:a. normal goods b. substitutes c. complements d. unrelated

4. Which of the following would cause the demand for gasoline to shift tothe right?a. an increase in the price of automobiles by $1000b. the price of gasoline falls by $0.10 per gallonc. buyers buy SUVs that are larger and obtain fewer miles per gallond. for health reasons, people desire to bicycle morea. all of the above

5. The percentage change in the quantity demanded of a product thatresults because of a percentage change in income is called the:a. price elasticity of demand c. income elasticity of demandb. cross elasticity of demand d. demand elasticity of different price

7/31/2019 Demand Analysis Practise Questions

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7/31/2019 Demand Analysis Practise Questions

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3 b4 c5 c6 b7 c,d

8 d9 b10 a11 a