Econ 111: Principles of Economics - Accelerated Treatment - Quiz 2
1) Fill in the blanks in the following statements:
a) The cross price-elasticity of demand for soda and newspapers is -0.4. Therefore soda and newspapers are ________ goods.
b) Goods with very close substitutes exhibit a more _________ demand.
c) Mary's income elasticity of demand for ham is +0.9. Ham is therefore a _________ good for Mary.
d) The price elasticity of demand for gasoline is -0.5. Tax revenue would __________ significantly if the government were to double the tax on gasoline.
e) The demand for ipods in the future is expected to be more ________ than the demand in the short run.
2) EXPLAIN if and why the following statement is true or false:
For a linear demand curve, the price elasticity of demand is the same thing with the slope of the demand curve.