CoStudyexam prep that shows its work
Open the study app

All certifications →Educational banks →

Home › Certifications › High school subjects › High School Economics › Elasticity and Market Outcomes

Elasticity and Market Outcomes — High School Economics practice questions

20 multiple-choice questions and 10 flashcards on Elasticity and Market Outcomes, about 9% of the High School Economics bank. Every one carries a written rationale.

Written and maintained by the CoStudy team · last updated 2026-10-02 · how we write and review questions

What this chapter covers

Elasticity and Market Outcomes is one of 11 chapters in CoStudy's High School Economics bank, and it holds 20 of the bank's 225 multiple-choice questions — roughly 9% of the total. That proportion is not arbitrary: chapters follow the certifying body's published exam outline, and the number of questions in each is set by that domain's published weight, so the share of your practice time this chapter takes matches the share of the real exam it accounts for.

Studying by chapter is worth doing once you have a diagnostic score. A single overall percentage tells you whether you are close; it does not tell you which domain is dragging. Working a weak chapter in isolation, and re-testing it in isolation, is the fastest way to move a score that has stalled — and it is why the mock exams in CoStudy report by domain rather than as one number.

Free Elasticity and Market Outcomes practice questions

4 questions drawn from this chapter, with the full rationale shown — the controlling principle behind the right answer, and why each wrong option tempts and fails.

A good with an income elasticity greater than 1 is a:

  1. inferior good
  2. necessity
  3. complement
  4. luxury good

Answer: D — luxury good

D) Correct — Spending on it rises faster than income. A) Has negative income elasticity. B) Has income elasticity between 0 and 1. C) Is defined by cross-price elasticity.

Price elasticity of demand measures:

  1. how much supply responds to price
  2. how much quantity demanded responds to price
  3. how much demand responds to a change in income
  4. the slope of the supply curve

Answer: B — how much quantity demanded responds to price

B) Correct — It compares the percentage changes. A) Is price elasticity of supply. C) Is income elasticity. D) Elasticity is about demand here.

Demand is elastic. If a firm raises its price, total revenue will:

  1. fall
  2. rise
  3. stay the same
  4. double

Answer: A — fall

A) Correct — Quantity falls by a larger percentage than price rises. B) Happens when demand is inelastic. C) Happens when demand is unit elastic. D) There is no reason for revenue to double.

Demand for one particular brand of bottled water is likely to be:

  1. inelastic
  2. elastic
  3. perfectly inelastic
  4. unaffected by price

Answer: B — elastic

B) Correct — Many close substitutes are available. A) Buyers can easily switch brands. C) Buyers do respond to price. D) Brand prices strongly affect sales.

Elasticity and Market Outcomes flashcards

4 cards from the 10 in this chapter.

What is consumer surplus?

The difference between what consumers are willing to pay and what they actually pay. Area under the demand curve, above the price.

What is economic efficiency?

Maximizing total surplus (consumer + producer). Achieved at competitive equilibrium with no market failures.

Worked example: Price of pizza rises from $10 to $12; weekly quantity demanded falls from 110 to 90 slices. Use the MIDPOINT formula to compute price elasticity of demand.

Step 1 — Midpoint % change in Q = (Q2 − Q1) / [(Q1 + Q2)/2] = (90 − 110) / [(110 + 90)/2] = −20 / 100 = −20%. Step 2 — Midpoint % change in P = (P2 − P1) / [(P1 + P2)/2] = (12 − 10) / [(10 + 12)/2] = 2 / 11 ≈ +18.18%. Step 3 — Elasticity Ed = %ΔQ / %ΔP = −20% / 18.18% ≈ −1.10. Step 4 — Take absolute value for interpretation: |Ed| ≈ 1.10 > 1, so demand is (slightly) ELASTIC over this range. Step 5 — Total revenue interpretation: with elastic demand, a price increase REDUCES total revenue (TR1 = $10 × 110 = $1,100; TR2 = $12 × 90 = $1,080).

What is price elasticity of demand?

How responsive quantity demanded is to a change in price. % change in quantity demanded ÷ % change in price.

Practise the full chapter

These are a sample. The full Elasticity and Market Outcomes chapter runs 30 items with per-chapter progress tracking, on the web and in the iOS app.

Open High School Economics in CoStudy →

Other High School Economics chapters

All High School Economics practice questions →