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Elasticity in Economics: Practice Problems

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

Which of the following scenarios would indicate inelastic demand with respect to price?

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1. What is the price elasticity of video games when the price rises by 10% and demand falls by 2%?

2. When income in Valley City increased from $65,000 per year to $80,000, sales of jewelry increased from $200,000 to $300,000. What is the income elasticity of demand for jewelry?

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About This Quiz & Worksheet

This quiz and worksheet will help you to determine what you understand about economic elasticity. Answer questions on key points such as calculating the price elasticity of demand and how to interpret cross-price elasticity in a given scenario.

Quiz & Worksheet Goals

See what you know about:

  • Income elasticity when your sales drop in a given example
  • An increase in demand and how that's connected to income elasticity
  • Cross-price elasticity when a competitor sells a similar product at a lower price

Skills Practiced

  • Problem solving - use acquired knowledge to solve economic elasticity practice problems
  • Critical thinking - apply relevant concepts to examine information about income and prices in a different light
  • Information recall - access the knowledge you've gained regarding cross-price elasticity and how it's calculated

Additional Learning

The accompanying lesson titled Elasticity in Economics: Practice Problems will teach you more about the following:

  • What 'elasticity' means, in economics terms
  • The calculations of price elasticity of demand and what they represent
  • Example of using the price elasticity formula
  • How to define income elasticity
  • Examples of income elasticity and cross-price elasticity formulas
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