1) A manager can determine if her product is viewed as a normal good or an inferior good by considering :

- price elasticity.

- cross elasticity.

- income elasticity.

- advertising elasticity.

2) Assume that product X has a negative cross elasticity with respect to shoes. If the price of shoes rises:

- the demand for product X will decrease.

- the quantity demanded for product X will increase.

- the demand for shoes will fall.

- the demand for product X will increase.

3)A luxury good has :

- a negative income elasticity.

- a cross elasticity of one.

- a very high income elasticity.

- a negative price elasticity.

The correct answer is income elasticity.

The elasticity of income estimates the percentage change in the quantity required product or services to shift in the income. The income elasticity connected with a lower quality product, and an increment in income will commence to a drop in demand, also start to change to more expensive replacement is known as the negative income elasticity. When the income elasticity is positive, it is linked with the normal product, and an increase in income will commence to an increase in demand. When the raises in income are not linked with a variation in the need for the products is known as a zero income elasticity.

2. The correct answer is the demand for product X will decrease.

The theory of economic that estimates the change in the quantity demanded of a particular product when the price of another product change is known as the cross elasticity of demand. The negative cross elasticity indicates two good that is complementary to each other means an increase in the price of one product will decrease the demand for another product.

3. The answer is a very high-income elasticity.

The luxury having the incomes elasticity greater than one, when customers income increases, the demand for quantity rises by more than the rising the income of the consumer.