Active learning ideas
Price elasticity measures responsiveness. It asks: if we change the price, how much will the quantity demanded or supplied actually change? For 5th Year students, this moves beyond the direction of change to the magnitude of change. They will calculate Price Elasticity of Demand (PED) and Price Elasticity of Supply (PES) and interpret what the numbers mean for businesses and government policy.
Activity 01
Students are given a list of items (e.g., insulin, luxury watches, bread, petrol). They must rank them from most inelastic to most elastic and explain their reasoning to a partner based on 'necessity' and 'substitutes.'
What does price elasticity measure?
Activity 02
Groups act as consultants for a cinema. They are given data on ticket sales at different prices. They must calculate the PED and advise the cinema whether to raise or lower prices to maximize total revenue.
How do we calculate PED and PES?
Activity 03
Set up stations with different word problems requiring the use of the elasticity formula. Students rotate to solve them, checking their work against a key at the next station to build calculation confidence.
Why is elasticity important for businesses and governments?
A few notes on teaching this unit
Watch Out for These Misconceptions
Elasticity is the same as the slope of the curve.
While related, elasticity measures percentage changes, not absolute changes. Using different scales on graphs in a group exercise can show students how a steep line might still be elastic depending on the starting point.
Inelastic demand means people will buy the same amount regardless of price.
Perfectly inelastic demand is rare; 'inelastic' usually just means the change in quantity is smaller than the change in price. Peer discussion about 'addictive' goods helps clarify this nuance.
Methods used in this brief
Demand and the Consumer
Analysis of consumer behaviour, the law of demand, and the factors that cause shifts in the demand curve.
8 methodologies
Supply and the Producer
Exploration of producer behaviour, the law of supply, and the determinants of supply in a market economy.
8 methodologies
Market Equilibrium and Price Determination
Students learn how the interaction of supply and demand determines market equilibrium prices and quantities.
8 methodologies