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AP® Microeconomics · Unit 2 · Topic 2.5

Other Elasticities: Topic Checklist (Microeconomics 2.5)

Specific “I can…” statements for income and cross-price elasticity of demand, each linked to the guide section and practice question that shows whether you can really do it.

Work through the list without notes. If you cannot do a statement, follow its link, then come back. Guide = study guide; Practice = practice questions.

Understanding

  • I can explain that elasticity can measure the response of quantity to any determinant of demand or supply, not just price. (Guide: “Elasticity is a general idea”; Practice Q7)
  • I can define income elasticity of demand and say what a positive, negative or zero value means. (Guide: “Income elasticity of demand”)
  • I can define cross-price elasticity of demand and say what a positive, negative or zero value means. (Guide: “Cross-price elasticity of demand”; Practice Q2)
  • I can explain why the sign must be kept for income and cross-price elasticity. (Guide: “The midpoint method again”; Practice Q7)
  • I can explain what the size of an XED says about how closely two goods are linked. (Guide: “Cross-price elasticity of demand”; Practice Q2)

Calculation and graphing

  • I can calculate YED and XED with the midpoint method, putting quantity in the numerator. (Guide: Worked examples 1 and 2; Practice Q1, Q4)
  • I can calculate YED or XED directly from given percentage changes. (Practice Q3)
  • I can use a known elasticity to predict the percentage change in quantity demanded at current prices. (Guide: Worked example 1(c), 2(c); Practice Q5, Q6)
  • I can draw the demand shift caused by a change in income for a normal and an inferior good. (Guide: Figure 1)
  • I can draw the demand shift caused by a change in the price of a substitute or a complement. (Guide: Figure 2; Practice Q5)

Reasoning

  • I can explain why a change in income or in another good’s price shifts the demand curve rather than moving along it. (Guide: “What YED looks like on a graph”; Practice Q5)
  • I can use XED to explain a firm’s pricing decision for complementary products. (Practice Q6)
  • I can explain why a good may be normal over one income range and inferior over another. (Practice Q7)

All ticked? Move on to Topic 2.6, Market Equilibrium and Consumer and Producer Surplus, or return to the course roadmap.

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