24. The demand for a good is elastic. Which of the following would be the most l

Question

24. The demand for a good is elastic. Which of the following would be the most likely explanation for this? A. The good is a necessity B. The good is broadly defined. C. The good costs a small portion of one's total income. D. The time interval considered is long. 25. GreenTree Corporation sells live Christmas trees. It observes that when it increases the p of Christmas trees by 10 percent, revenue rises by 25 percent. The demand for Christmas trees is: A. Inelastic. B. Elastic. C. Unit elastic. D. Perfectly elastic 26. An economist estimates that with every 15 percent increase in income, the quantity of turkey purchased declines by 1.8 percent. From this information one would conclude that turkey is A. A luxury B. A necessity C. An inferior good. D. A normal good. 27. If an economist observed that higher hot dog prices lead to an increase in the demand for chili, she most likely would conclude that: A. Chili and hot dogs are complements. B. Chili and hot dogs are substitutes C. Chili and hot dogs are both inferior goods D. Chili and hot dogs are both normal goods. 28. College students tend to eat more ramen noodles than do recent college graduates. A primary reason for this is that: A. Ramen noodles are a normal good. B. Ramen noodles are an inferior good. C. Ramen noodles are a luxury good D. Ramen noodles are scarce. 29. If price is increased by law from a market equilibrium value of $5 to a higher value of $6: A. Both producer surplus and consumer surplus will increase. B. Consumer surplus will decrease and there will be some lost surplus. C. Producer surplus will decrease and there will be some lost surplus. D. There will be lost surplus, as both producer surplus and consumer surplus decrease.

Explanation / Answer

24. B,

Elastic goods are those for which demand fall by larger amount for given change in price. Since for elastic good there are close substitutes available .

25.A,

For inelastic demand price increase don't lead to large change in quantity . Thus revenue increaes.

26. C

For inferior good increaes in income leads to decline in consumption

27.B

For substitutes increase in price of good leads to increase in quantity demanded of other good.

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