AP®︎ Microeconomics: Topic 2.3 Practice Test
Prepare for your quiz, test, or the AP exam with focused practice questions on Topic 2.3 of AP Microeconomics – Price Elasticity of Demand.
Questions List
Topic 2.3
Question 1 Easy
This question tests the following: MKT-3.E.1
What does the law of demand state?
What You’re Being Tested On:
Explore the learning objectives taken directly from the College Board’s AP® Microeconomics Curriculum. Ensure you’re prepared for the exact topics covered on the AP® exam, in-class tests, and quizzes, and gain confidence in your mastery of the material.
Topic 2.3: Price Elasticity of Demand
Learning Objective: MKT-3.E
a. Define measures of elasticity. b. Explain (using graphs where appropriate) measures of elasticity and the impact of a given price change on total revenue or total expenditure. c. Calculate (using data from a graph or a table as appropriate) measures of elasticity.
Essential Knowledge: MKT-3.E.1
Economists use the concept of elasticity to measure the magnitude of percentage changes in quantity owing to any given changes in the own-price, income, and prices of related goods.
Essential Knowledge: MKT-3.E.2
Price elasticity of demand is measured by the percentage change in quantity demanded divided by the percentage change in price or the responsiveness of the quantity demanded to changes in price. Elasticity varies along a linear demand curve, meaning slope is not elasticity.
Essential Knowledge: MKT-3.E.3
Ranges of values of elasticity of demand are described as elastic or inelastic with the separating benchmark being a magnitude of 1, where the change in the price and the change in the quantity demanded are proportional. a. When the magnitude of the value of elasticity is greater than 1, the demand is described as being elastic with respect to that price in the range of the given change. b. When the magnitude of the value of elasticity is less than 1, the demand is described as being inelastic with respect to that price in the range of the given change. c. When the magnitude of the value of elasticity is equal to 1, the demand is described as being unit elastic with respect to that price in the range of the given change.
Essential Knowledge: MKT-3.E.4
The price elasticity of demand depends on certain factors such as the availability of substitutes.
Essential Knowledge: MKT-3.E.5
The impact of a given price change on total revenue or total expenditure will depend on whether demand is elastic, inelastic, or unit elastic.
