AP Microeconomics Flashcards: Other Elasticities
Written by AP Content Team, Verified for 2026 AP Exams, Last updated: May 2026
Review key ideas with interactive flashcards. This set includes 10 cards to help you master important concepts.
How do you calculate the cross-price elasticity of demand?
You calculate it by dividing the percentage change in quantity demanded of one good by the percentage change in the price of another good.
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How do you calculate the cross-price elasticity of demand?
You calculate it by dividing the percentage change in quantity demanded of one good by the percentage change in the price of another good.
The price of Good X increases, causing the quantity demanded of Good Y to increase. What does this imply about their cross-price elasticity?
This implies that the cross-price elasticity of demand is positive, and the goods are substitutes.
How do you calculate the income elasticity of demand?
You calculate it by dividing the percentage change in quantity demanded by the percentage change in consumers' income.
What does the cross-price elasticity of demand help economists determine?
It helps economists determine whether goods are substitutes, complements, or not related.
Is elasticity only measured in relation to price?
No, elasticity can be measured for any determinant of demand or supply, not just the price.
What is cross-price elasticity of demand?
It measures the percentage change in the quantity demanded of one good divided by the percentage change in the price of another good.
If the price of peanut butter increases and the quantity demanded of jelly decreases, what does this indicate about the relationship between the two goods?
This indicates that the goods are complements, as determined by the cross-price elasticity of demand.
What is income elasticity of demand?
It measures the percentage change in quantity demanded divided by the percentage change in consumers' income.
What is the primary purpose of calculating income elasticity of demand?
Economists use the income elasticity of demand to determine whether a good is normal or inferior.
If a 10% increase in consumer income leads to a 5% decrease in the quantity demanded for a good, what can be concluded about that good?
Based on the income elasticity of demand, this good would be classified as an inferior good.