21) If the cross elasticity of demand between goods X and Y is positive and between goods X and Z is negative, then X and Y are ________ and X and Z are ________.

A) price inelastic; complements

B) complements; substitutes

C) substitutes; complements

D) price inelastic; income elastic

22) If a rise in the price of good 1 decreases the quantity of good 2 demanded,

A) the cross elasticity of demand is negative.

B) the cross elasticity of demand is positive.

C) good 1 is an inferior good.

D) good 2 is an inferior good.

23) When the price of milk rose 50 percent, the quantity of milk sold fell 25 percent and the sale of breakfast cereals also fell 25 percent. This set of facts indicates that the

A) demand for milk is price elastic.

B) demand for breakfast cereals is price elastic.

C) cross elasticity between milk and cereal is negative so the two are complements.

D) cross elasticity between milk and cereal is positive so the two are complements.

24) Suppose Clyde always eats ice cream and chocolate syrup together. If the price of syrup increases by 10 percent, and the cross elasticity of demand is -2, the demand for ice cream

A) increases by 5 percent.

B) increases by 20 percent.

C) decreases by 5 percent.

D) decreases by 20 percent.

25) Bus rides and canned soup are inferior goods, so the ________ elasticity of demand is ________.

A) cross; positive

B) income; positive

C) income; negative

D) cross; negative

26) Demand is income elastic if

A) a large percentage increase in income results in a small percentage increase in quantity demanded.

B) a small percentage increase in income results in a large percentage increase in quantity demanded.

C) an increase in income does not affect the quantity demanded.

D) the good in question has close substitutes.

27) For Product X, the income elasticity of demand is -2.56. Which of the following is therefore true?

A) Product X is a necessity.

B) Product X is a luxury.

C) Product X is an inferior good.

D) Product X is a normal good.

28) When consumers' incomes increased 6 percent, the quantity of wine bought increased 12 percent.This result means

A) wine is a luxury.

B) the demand for wine is income inelastic.

C) wine is a necessity.

D) wine is an inferior good.

29) An increase in Abigail's income decreases her demand for used cars. For her, used cars are

A) a normal good.

B) an inferior good.

C) a complement to any good.

D) a substitute good.

30) As Mary's income increases by 20 percent, her demand for tickets to National Hockey League games increases by 10 percent. Mary's demand for tickets is income ________; for Mary, hockey tickets are ________ good.

A) elastic; a normal

B) inelastic; a normal

C) elastic; an inferior

D) inelastic; an inferior