Elasticity Practice for AP Microeconomics

Question 1: Own Price Elasticity of Demand (OPED)

When the price of coffee increases from $4 to $5, the quantity demanded decreases from 100 cups to 80 cups per day.

Calculate the Own Price Elasticity of Demand using the standard formula.

OPED =

Question 2: OPED and Total Revenue

Based on your calculation in Question 1:

What happens to total revenue when the price of coffee increases?

A) Total revenue increases
B) Total revenue decreases
C) Total revenue stays the same
D) Cannot be determined from the information given

Question 3: Mid-point OPED

Using the same data from Question 1, calculate the Own Price Elasticity of Demand using the mid-point formula.

Mid-point OPED =

Question 4: Cross Price Elasticity of Demand (CPED)

When the price of tea increases by 20%, the quantity demanded of coffee increases by 10%.

Calculate the Cross Price Elasticity of Demand between tea and coffee.

CPED =

Question 5: Relationship between Goods

Based on your calculation in Question 4, tea and coffee are:

A) Complementary goods
B) Substitute goods
C) Independent goods
D) Inferior goods

Question 6: Income Elasticity of Demand (IED)

When consumer income increases from $40,000 to $50,000, the quantity demanded of restaurant meals increases from 20 to 30 meals per month.

Calculate the Income Elasticity of Demand.

IED =

Question 7: Type of Good

Based on your calculation in Question 6, restaurant meals are:

A) Normal good with low income elasticity
B) Normal good with high income elasticity
C) Inferior good
D) Sub good

Question 8: Own Price Elasticity of Supply (OPES)

When the price of a product increases from $10 to $12, the quantity supplied increases from 100 units to 150 units.

Calculate the Own Price Elasticity of Supply.

OPES =

Question 9: Determinants of Elasticity

Which of the following factors would likely INCREASE the price elasticity of demand for a good?

A) The good has fewer available substitutes
B) The good is considered a necessity
C) Consumers have less time to adjust to price changes
D) The good represents a larger portion of consumers' budgets

Question 10: Elasticity and Market Analysis

A business sells headphones with a price elasticity of demand of -0.8. If they want to increase total revenue, they should:

A) Increase the price
B) Decrease the price
C) Keep the price constant
D) Not enough information to determine