Question

True and False question: (I will be grateful if you could give a short explanation of the answer to each question.)

1. A profit-maximizing museum will set its admission price at a point where the demand is inelastic.

1. True              (b) False

2. The cross-elasticity of demand between CDs and the subscription price for online music is positive.

1. True             (b) False

3. The demand for expensive cultural goods may contain an element of conspicuous consumption.

1. True            (b) False

4. If the income elasticity of demand for a cultural product is positive but less than one, an increase in the consumer’s income will bring about an increase in the proportion of his income spent on the product.

1. True            (b) False         

5. The expression “De gustibus non est disputandum” suggests that culture is a shared phenomenon.

(a)True              (b) False

6. Bonnie is a music lover. She used to go to a concert only once a year because she had to spend most of her budget on rent and food. Two months ago, she was given a promotion and her salary doubled. She started going to a concert every week. The change in her behaviour can be explained by a shift in her demand curve for concerts.

1. True            (b) False

Answer 1

1.a.true

Reason: it is because inelasticity favor large change in price will not affect the level of demand but as we can see in elasticity demand model that is if we increase price demand will go down at larger extent.

2.b.false

Reason: it comes under negative cross elasticity of demand, the term cross elasticity refers to two commodities are interconnected. In this case online music's demand goes up then CD s demand will go down . This is negative cross elasticity of demand.

3.a true

Reason:conspicuous means lavish or wasteful spending . Cultural goods can be protecting area of conflict which can be conspicuous.

4.b.false

Reason: if income elasticity of demand is less than 1 then demand is said to be income inelastic. Suppose income elasticity is 0.5

, this means the change in demand is propotionally less then the change in income.