Elasticity
All 15 Elasticity terms in the AP Economics glossary — each with a clear, exam-accurate definition. Tap any term for the full explanation, formula, and related interactive graph.
Cross-price elasticity of demand measures how responsive the quantity demanded of one good is to a change in the price of another good.
Elastic demand is when the quantity demanded changes more than the price changes.
Income elasticity of demand measures how responsive the quantity demanded is to a change in consumers' income.
Inelastic demand is when the quantity demanded changes less than the price changes.
The midpoint method calculates elasticity using the average of the two prices and quantities, so it gives the same value in either direction.
Perfectly elastic demand is when any change in price leads to an infinite change in quantity demanded.
Perfectly inelastic demand is when any change in price leads to no change in quantity demanded.
Price elasticity of demand measures how responsive quantity demanded is to a change in the good's price.
Price elasticity of supply measures how responsive the quantity supplied is to a change in price.
The total revenue test uses how total revenue responds to a price change to tell whether demand is elastic or inelastic.
Unit elastic is when the percentage change in quantity demanded equals the percentage change in price.
The determinants of price elasticity of demand are the factors that make demand more or less responsive to price: substitutes, necessity, budget share, and time horizon.
Marginal revenue is positive when demand is elastic, zero at unit elasticity, and negative when demand is inelastic—so a price-maker never sells in the inelastic range.
Along a straight-line demand curve, total revenue rises in the elastic upper half, peaks at the unit-elastic midpoint, and falls in the inelastic lower half.
Arc elasticity measures responsiveness between two points using average (midpoint) values, while point elasticity measures it at a single point using the slope at that point.