1). All of the following statements are true EXCEPT A. the demand for gasoline i
ID: 1137666 • Letter: 1
Question
1). All of the following statements are true EXCEPT
A.
the demand for gasoline is more elastic the longer the time elapsed.
B.
the smaller the proportion of income spent on a good, the more inelastic demand will be.
C.
the demand for food is less elastic than the demand for a Hawaiian vacation.
D.
the demand for Nike running shoes is less elastic than the demand for shoes.
E.
the demand for clothing is less elastic than the demand for blue jeans.
2). The income elasticity of demand for electricity is 1.90. Suppose the economy improves and incomes are expected to increase by 10 percent. This means that:
A.
electricity demand is income inelastic.
B.
consumers will spend 19 percent of their income on electric power.
C.
power companies can expect to sell 19 percent more electricity.
D.
electricity is an inferior good.
E.
consumers will try to find substitutes for electric power.
3).
A city must decide to pay for its workers' pension plan. If the city puts the decision up for a vote by citizens, resource use will be determined by a _____ method.
A.
command
B.
force
C.
sharing equally
D.
first-come, first-served
E.
majority rule
Explanation / Answer
1. The correct option should be the demand for Nike running shoes is less elastic than the demand for shoes. The reason behind this is that there will be more no of substitutes for a specific brand than the general running shoes. The demand for running shoes may be less elastic than the demand for Nike running shoes as the consumers can always shift from the Nike to other popular brands available. Also the elasticity of demand for running shoes is inelastic because there will njot be many substitutes for running shoes, therefore not many options will be there for the consumer to shift to.
2. The income elasticity of demand for electricity is 1.90. Suppose the economy improves and incomes are expected to increase by 10 percent. due to increase in income by 10% the demand for electricity will go up by 19% considering electricity a normal good. Thus the electricity companies can expect a rise in electricity consumption by 19%.
3. A city must decide to pay for its workers' pension plan. If the city puts the decision up for a vote by citizens, resource use will be determined by a majority rule method. A voting is done to determine the opinion of the majority and the decision is taken as the wish of the majority. The correct option is E.
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