Econ 202
ECON 202 Exam 2 Questions and
Answers 2026 Update
Elasticity -Correct Answer ✔-A measure of how much one economic variable responds
to changes in another economic variable.
Price elasticity of demand -Correct Answer ✔-The responsiveness of the quantity
demanded to a change in price, measured by dividing the percentage change in the
quantity demanded of a product by the percentage change in the product's price.
Equation for Measuring the Price Elasticity of Demand -Correct Answer ✔-(Percentage
change in quantity demanded) / (Percentage Change in Price)
Price Elasticity of demand is always __________. -Correct Answer ✔-negative
Midpoint Formula for Price elasticity of demand -Correct Answer ✔-[(Q2-
Q1)/[(Q1+Q2)/2]] / [(P2-P1)/[(P1+P2)/2]]
Elastic demand -Correct Answer ✔-price elasticity > 1 (in absolute value)
i.e. % change in quantity > % change in price
Inelastic Demand -Correct Answer ✔-price elasticity < 1 (in absolute value)
i.e. % change in quantity < % change in price
Unit-Elastic demand -Correct Answer ✔-price elasticity = 1 (in absolute value)
i.e. % change in quantity = % change in price
Perfectly inelastic demand -Correct Answer ✔-The case where the quantity demanded is
completely unresponsive to price, and the price elasticity of demand equals zero.
Demand slope = 0( vertical demand slope)
Perfectly elastic demand -Correct Answer ✔-the case where the quantity demanded is
infinitely resposive to price, and the price elasticity of demand equals infinity.
(horizontal demand slope)
Key determinants of the price elasticity of demand -Correct Answer ✔-availability of
close substitutes
Passage of time
Econ 202
, Econ 202
Luxuries versus necessities
definition of market
Share of good in the consumer's budget
a price cut in an Inelastic demand, will __________ Total Revenue. -Correct Answer ✔-
Decrease
A price cut in an elastic demand, will ________ Total Revenue. -Correct Answer ✔-
increase
When demand is more elastic then supply, consumer tax incidence is ________ than
producer's tax incidnence -Correct Answer ✔-smaller
When demand is less elastic then supply, consumer tax incidence is ________ than
producer's tax incidnence -Correct Answer ✔-larger
Price Elasticity of Supply -Correct Answer ✔-The responsiveness of the quantity supplied
to a change in price, measured by dividing the percentage in the quantity supplied of a
product by the percentage change in the product's price.
Price Elasticity of Supply Equation -Correct Answer ✔-Percentage Change in Quantity
Supplied / Percentage change in price
Determinants of the Price Elasticity of Supply -Correct Answer ✔-Short Run vs Long Run
Availability of Resources ( example: Land)
Cross-Price Elasticity of Demand -Correct Answer ✔-The percentage in quantity
demanded of one good divided by the percentage change in the price of another good.
Cross-Price Elasticity of Demand Equation -Correct Answer ✔-(Percentage change in
Quantity demanded of one good) / (Percentage change in the price of another)
If the products are _______ Then the cross-price elasticity of demand will be
_____________. Example -Correct Answer ✔-Substitutes
positive
two brands of tablet computers
If the products are _______ Then the cross-price elasticity of demand will be
_____________. Example -Correct Answer ✔-Complements
Econ 202
ECON 202 Exam 2 Questions and
Answers 2026 Update
Elasticity -Correct Answer ✔-A measure of how much one economic variable responds
to changes in another economic variable.
Price elasticity of demand -Correct Answer ✔-The responsiveness of the quantity
demanded to a change in price, measured by dividing the percentage change in the
quantity demanded of a product by the percentage change in the product's price.
Equation for Measuring the Price Elasticity of Demand -Correct Answer ✔-(Percentage
change in quantity demanded) / (Percentage Change in Price)
Price Elasticity of demand is always __________. -Correct Answer ✔-negative
Midpoint Formula for Price elasticity of demand -Correct Answer ✔-[(Q2-
Q1)/[(Q1+Q2)/2]] / [(P2-P1)/[(P1+P2)/2]]
Elastic demand -Correct Answer ✔-price elasticity > 1 (in absolute value)
i.e. % change in quantity > % change in price
Inelastic Demand -Correct Answer ✔-price elasticity < 1 (in absolute value)
i.e. % change in quantity < % change in price
Unit-Elastic demand -Correct Answer ✔-price elasticity = 1 (in absolute value)
i.e. % change in quantity = % change in price
Perfectly inelastic demand -Correct Answer ✔-The case where the quantity demanded is
completely unresponsive to price, and the price elasticity of demand equals zero.
Demand slope = 0( vertical demand slope)
Perfectly elastic demand -Correct Answer ✔-the case where the quantity demanded is
infinitely resposive to price, and the price elasticity of demand equals infinity.
(horizontal demand slope)
Key determinants of the price elasticity of demand -Correct Answer ✔-availability of
close substitutes
Passage of time
Econ 202
, Econ 202
Luxuries versus necessities
definition of market
Share of good in the consumer's budget
a price cut in an Inelastic demand, will __________ Total Revenue. -Correct Answer ✔-
Decrease
A price cut in an elastic demand, will ________ Total Revenue. -Correct Answer ✔-
increase
When demand is more elastic then supply, consumer tax incidence is ________ than
producer's tax incidnence -Correct Answer ✔-smaller
When demand is less elastic then supply, consumer tax incidence is ________ than
producer's tax incidnence -Correct Answer ✔-larger
Price Elasticity of Supply -Correct Answer ✔-The responsiveness of the quantity supplied
to a change in price, measured by dividing the percentage in the quantity supplied of a
product by the percentage change in the product's price.
Price Elasticity of Supply Equation -Correct Answer ✔-Percentage Change in Quantity
Supplied / Percentage change in price
Determinants of the Price Elasticity of Supply -Correct Answer ✔-Short Run vs Long Run
Availability of Resources ( example: Land)
Cross-Price Elasticity of Demand -Correct Answer ✔-The percentage in quantity
demanded of one good divided by the percentage change in the price of another good.
Cross-Price Elasticity of Demand Equation -Correct Answer ✔-(Percentage change in
Quantity demanded of one good) / (Percentage change in the price of another)
If the products are _______ Then the cross-price elasticity of demand will be
_____________. Example -Correct Answer ✔-Substitutes
positive
two brands of tablet computers
If the products are _______ Then the cross-price elasticity of demand will be
_____________. Example -Correct Answer ✔-Complements
Econ 202
