Section I: AP Microeconomics — Unit 2: Elasticity
18:00
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5-Choice AP Format (A–E)
Section I: Elasticity Practice Questions
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AP Microeconomics Section I Directions
Each of the questions or incomplete statements below is followed by five suggested answers or completions (A–E). Select the one that is best in each case.
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AP Microeconomics Elasticity Reference
Price Elasticity of Demand (Ed)
Ed = (% Δ Quantity Demanded) / (% Δ Price)
• |Ed| > 1: Elastic | |Ed| < 1: Inelastic | |Ed| = 1: Unit Elastic
• |Ed| > 1: Elastic | |Ed| < 1: Inelastic | |Ed| = 1: Unit Elastic
Total Revenue Test (TR = P × Q)
• Elastic Demand: P and TR move in opposite directions.
• Inelastic Demand: P and TR move in the same direction.
• Unit Elastic Demand: P changes leave TR unchanged.
• Inelastic Demand: P and TR move in the same direction.
• Unit Elastic Demand: P changes leave TR unchanged.
Price Elasticity of Supply (Es)
Es = (% Δ Quantity Supplied) / (% Δ Price)
Cross-Price Elasticity of Demand (Exy)
Exy = (% Δ Qx) / (% Δ Py)
• Exy > 0: Substitutes | Exy < 0: Complements
• Exy > 0: Substitutes | Exy < 0: Complements
Income Elasticity of Demand (EI)
EI = (% Δ Q) / (% Δ Income)
• EI > 0: Normal Good | EI < 0: Inferior Good
• EI > 0: Normal Good | EI < 0: Inferior Good
Excise Tax Incidence
The side of the market (buyers or sellers) that is relatively more inelastic bears the larger share of the tax burden.