Price elasticity of demand & supply
Last lesson we saw that a price change alters the quantity people buy. Now we measure by how much — that measurement is called elasticity. We build the price elasticity of demand formula (percentage change in quantity divided by percentage change in price) and work through two calculations together, line by line: one elastic answer above one, and one inelastic answer below one. We learn that elastic curves are flat and inelastic curves are steep, meet the price elasticity of supply, and finish with the two big real-world uses: why governments tax inelastic goods like fuel and tobacco, and why firms must know elasticity before changing a price to manage their total revenue.
By the end you should be able to (NSSCO Economics 3.3):
- Define price elasticity of demand and price elasticity of supply
- Discuss and apply price elasticity of demand and supply
- Perform simple calculations of elasticity and inelasticity of demand and supply
Miss Hilma and Mike talk through the whole topic — with the figure and working drawn live.