Question 10.5 pts
Refer to table 1. Honda Corporation estimates the price elasticities of demand for three groups of potential buyers of Honda Civic as follows:

Table 1

Group 	Price elasticity of demand
A	-0.9
B	-1.3
C	-0.8

Based on the estimates of the elasticities, Honda is planning to offer promotion to select group(s) of buyers to increase its revenue. The promotional offer includes either a 0% or no interest 5 year loan or an upfront 5% cash back on any purchase of new Honda Civic model.

Based on the estimates of the price elasticity of demand which group(s) of potential buyers should receive the offer?

Group of answer choices

Groups A and B should receive the offer.

Groups A and C should receive the offer.

Groups B and C should receive the offer

Only group A  should receive the offer.

Only group B  should receive the offer.

Only group C  should receive the offer.
 
Flag question: Question 2
Question 20.5 pts
Suppose when the price of movie tickets is $5, the quantity demanded is 500. An increase in price to $7 per ticket decreases quantity demanded to 300. Calculate price elasticity of demand using the mid-point method (refer to slide ‘02. How to calculate price elasticity of demand’)
Group of answer choices

-1

1

-1.5

1.5

-1.4

1.4
 
Flag question: Question 3
Question 30.5 pts
A 10% increase in income leads to increase in demand for beef by 9%. How much is the income elasticity of demand? Is beef a normal or inferior good, a necessity or a luxury? (refer to slide ‘Income and cross elasticity’) 

Group of answer choices

income elasticity=-1.11; normal and necessity.

income elasticity=1.11; normal and necessity.

income elasticity=0.9; normal and necessity.

income elasticity=-0.9; normal and necessity.
 
Flag question: Question 4
Question 40.5 pts
A 10% increase income leads to decrease in the demand for fatty beef by 9%. How much is the income elasticity of demand? Is fatty beef a normal or inferior good? Is fatty beef a normal or inferior good, a necessity or a luxury? (refer to slide ‘04. Income and cross elasticity’)
Group of answer choices

income elasticity=-0.9; inferior.

income elasticity=-0.9; necessity.

income elasticity=0.9; normal and necessity.

income elasticity=-1.11; normal and necessity.
 
Flag question: Question 5
Question 50.5 pts
As Google fiber monthly price decreases by 10%, demand for AT&T gigabyte service decreases by 7%. Calculate cross-price elasticity of demand. 

Based on the cross elasticity of demand for  AT&T gigabyte Internet service, are AT&T gigabyte Internet service and Google fiber substitutes or complements?
Group of answer choices

cross-price elasticity = 1.43; complements..

cross-price elasticity = 0.7; substitutes.

cross-price elasticity = -0.7; substitutes.

cross-price elasticity = 0.7; complements.
 
Flag question: Question 6
Question 60.5 pts
If the demand for a particular brand of car increases by 15% due to an increase in income by 10%, how much is the income elasticity? Is this product a normal/inferior good, a necessary or luxury? (refer to slide ‘04. Income and cross elasticity’)
Group of answer choices

income elasticity=0.5; normal and luxury.

income elasticity=2; normal and luxury.

income elasticity=-1.5; normal and luxury.

income elasticity=1.5; normal and luxury.
 
Flag question: Question 7
Question 71 pts
Based on the estimate of the income elasticity in the second column, identify in the last column in the table below whether an item is a necessity, luxury, or inferior.

 

Items	Income elasticity	Necessity/luxury/inferior
Bose speaker	3	 
Hot dog	-2	 
Textbook	0.1	 
Sweet candy	-1.2	 
Chicken	0.5	 
Group of answer choices

 

Items	Income elasticity	Necessity/luxury/inferior
Bose speaker	3	Luxury 
Hot dog	-2	Necessity
Textbook	0.1	 Inferior
Sweet candy	-1.2	 Necessity
Chicken	0.5	 Inferior

 

Items	Income elasticity	Necessity/luxury/inferior
Bose speaker	3	Luxury 
Hot dog	-2	 Inferior
Textbook	0.1	 Necessity
Sweet candy	-1.2	 Inferior
Chicken	0.5	 Necessity

 

Items	Income elasticity	Necessity/luxury/inferior
Bose speaker	3	Necessity
Hot dog	-2	Luxury
Textbook	0.1	 Inferior
Sweet candy	-1.2	 Luxury
Chicken	0.5	 Inferior
 
Flag question: Question 8
Question 81 pts
Based on the estimate of the cross-price elasticity between two goods in the second column, identify in the last column in the table below whether the items items are complements, substitutes or have no relation.

 

Items	Cross-price elasticity	Complements/Substitutes/No relation
Bread and butter	-1.5	 
Toyota Camry and Honda Accord	0.4	 
Public transportation and truck	0	 
Air travel and driving long distance	2	 
Milk and cereal	-0.2	 
Group of answer choices

Items	Cross-price elasticity	Complements/Substitutes/No relation
Bread and butter	-1.5	 Complements
Toyota Camry and Honda Accord	0.4	 Substitutes
Public transportation and truck	0	 No relationship
Air travel and driving long distance	2	 Substitutes
Milk and cereal	-0.2	 Complements

Items	Cross-price elasticity	Complements/Substitutes/No relation
Bread and butter	-1.5	 Substitutes
Toyota Camry and Honda Accord	0.4	 Complements
Public transportation and truck	0	 No relationship
Air travel and driving long distance	2	 Complements
Milk and cereal	-0.2	 Substitutes

Items	Cross-price elasticity	Complements/Substitutes/No relation
Bread and butter	-1.5	 No relationship
Toyota Camry and Honda Accord	0.4	 Complements
Public transportation and truck	0	 No relationship
Air travel and driving long distance	2	 Complements
Milk and cereal	-0.2	No relationship