Source: Edarabia. Best Economic Courses-Economic Policy.

Retrieved from https://www.edarabia.com/courses/economics/

12

Quarter 1 – Module 4:
Applied Economics
The Elasticity of Demand and Supply

1
Applied Economics - Grade 12
Quarter 1 – Module 4: Elasticity of Demand and Supply

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Regional Director: Gilbert T. Sadsad

Assistant Regional Director: Jessie L. Amin

Development Team of the Module

Writers: Malvina Q. Capistrano

Editors: Elizabeth N. Macale, ASP II / Evangeline A. Lagrimas SHS, TII
Reviewers: Joy G. Cabrera, EPS / Darcy Guy Y. Mañebo, EPS
Illustrator: Malvina Q. Capistrano
Layout Artist: Malvina Q. Capistrano

2
Applied Economics - Grade 12
Quarter 1 – Module 4: Elasticity of Demand and Supply

I. INTRODUCTION
Have you ever surprised why there are products that you buy despite a high increase in its price? Or
why there are products in which a slight increase in their prices, you reluctantly buy such a product
or even you can live without it? In this module, you will learn about the concept of elasticity and
why it is necessary for your everyday decision-making as a consumer.

II. OBJECTIVES
At the end of the lesson, you will be able to:
1. Learn about the concept of elasticity;
2. Identify the different kinds of elasticity;
3. Compute the elasticity of demand and supply. and
4. Apply the concept of elasticity to a market situation.

III. VOCABULARY LIST

Read and understand the following economic terminologies before you proceed reading to the
next succeeding pages of this module to guide you properly with the discussion of the topic.
▪ Elasticity – use to determine how changes in product demand and supply related to changes in
consumer income or the producer price.
▪ Elastic Demand – A slight change in the price will lead to a drastic change in the demand for the
product.
▪ Complement Good – two goods for which an increase in the price of one leads to a decrease in the
demand for the other.
▪ Cross-Price Elasticity of Demand – a measure of how much the quantity demanded of one good
response to a change in the price of another good, computed as the percentage change in quantity
demanded of the first good divided by the percentage change in the price of the second good.
▪ Inferior Good – a good for which, other things equal, an increase in income leads to a decrease in
demand.
▪ Income Elasticity of Demand – a measure of how much the quantity demanded of a good response
to a change in consumers' income, computed as the percentage change in quantity demanded
divided by the percentage change in income.
▪ Inelastic Demand – An elastic product is one that consumers continue to purchase even after a
change in price.
▪ Normal Good – a good for which, other things equal, an increase in income leads to an increase in
demand.
▪ Price Elasticity of Demand – a measure of how much the quantity demanded of a good response
to a change in the price of that good, computed as the percentage change in quantity demanded
divided by the percentage change in price.

3
▪ Price Elasticity of Supply – a measure of how much the quantity supplied of a good response to a
change in the price of that good, computed as the percentage change in quantity supplied divided
by the percentage change in price.
▪ Substitute Good – two goods for which an increase in the price of one leads to an increase in the
demand for the other.
▪ Superior Good – are luxury goods that are always expensive and often are relatively scarce or
harder to come by. These are goods that are something very pleasant but not really needed in life.
Source: Mankiw NG. Principles of Economics, 5th edition.
eBook. http://www.ccebook.cne

IV. PRE-TEST

TEST YOURSELF

Choose the correct letter of your answer and write it on the separate paper.
1. The responsiveness of demand/supply to a change in its determinants.
a. Arc Elasticity b. Elasticity c. Point Elasticity d. Price Elasticity
2. At a given price, quantity demanded can change infinitely. The demand is __________.
a. Elastic b. Inelastic c. Perfectly Elastic d. Perfectly Inelastic
3. The price elasticity of demand measures:
a. The degree of responsiveness of quantity supplied to variation in price.
b. The degree of responsiveness of quantity demanded to variations in price.
c. The price of the commodity at which buyers are willing to buy.
d. The number of goods that buyers are willing to buy.
4. The price of elasticity of supply measures:
a. The degree of responsiveness of quantity supplied to variation in price.
b. The degree of responsiveness of quantity demanded to variation in price.
c. The price of the commodity at which buyers are willing to buy.
d. The number of goods that buyers are willing to buy.
5. Demand for a product is said to be inelastic if:
a. Consumers are sensitive to the price at which a product is sold and will only buy it if the
price rises by what they consider too much.
b. Consumers will only pay a certain price, or a narrow range of prices, for the product.
c. Consumers will pay almost any price for the product.
d. All of the above

V. LEARNING ACTIVITY

Demand for hand sanitizer is rise rapidly around the world as the new coronavirus spreads, prompting
retailers to restrict consumption of such supplies and online vendors to hike prices. The price of hand
sanitizer has been increased by about 400%, from P25 per bottle to P125 during the pandemic period.
How would you react to this situation? Are you still willing to buy a hand sanitizer despite four (4)
times increased from its original price and limited supplies? Why?
Relate this situation to your five (5) nearest neighbors or close friends and ask the same questions and
compare your reaction with their responses. Do you have the same replies?

4
from https://www.slideshare.net/itutor/elasticity-
Source: ITutor. Elasticity of Demand. Retrieved

ELASTICITY OF DEMAND

As a consumer, you are usually demanding more of goods

when its price is lower, when your incomes are higher, when
the value of substitute goods is higher, or when the rate of the
of-demand-25740430

complement goods is cheaper. It is your natural reaction as a

consumer but, it is not happening all the time. The level of the
consumers’ responsiveness varies greatly, and it can measure
by the price of elasticity of demand.
You can classify the demand elasticity according to the factors
that cause the change: the price elasticity, the income
elasticity, and the cross-price elasticity.

Price Elasticity of Demand

The price elasticity of demand is dealing with the sensitivity of quantities bought by a consumer to a
change in the product price. You can compute the price elasticity of demand, by using the following
formula:
𝑷𝒆𝒓𝒄𝒆𝒏𝒕𝒂𝒈𝒆 𝒄𝒉𝒂𝒏𝒈𝒆 𝒊𝒏 𝒒𝒖𝒂𝒏𝒕𝒊𝒕𝒚 𝒅𝒆𝒎𝒂𝒏𝒅𝒆𝒅
𝑬𝒅 =
𝑷𝒆𝒓𝒄𝒆𝒏𝒕𝒂𝒈𝒆 𝒄𝒉𝒂𝒏𝒈𝒆 𝒊𝒏 𝒑𝒓𝒊𝒄𝒆
𝑸𝟐−𝑸𝟏
Where: 𝑷𝒆𝒓𝒄𝒆𝒏𝒕𝒂𝒈𝒆 𝒄𝒉𝒂𝒏𝒈𝒆 𝒊𝒏 𝒒𝒖𝒂𝒏𝒕𝒊𝒕𝒚 𝒅𝒆𝒎𝒂𝒏𝒅𝒆𝒅 =
𝑸𝟏
𝑷𝟐−𝑷𝟏
𝑷𝒆𝒓𝒄𝒆𝒏𝒕𝒂𝒈𝒆 𝒄𝒉𝒂𝒏𝒈𝒆 𝒊𝒏 𝒑𝒓𝒊𝒄𝒆 =
𝑷𝟏
Therefore:
𝑸𝟐 − 𝑸𝟏
𝑸𝟏
𝑬𝒅 =
𝑷𝟐 − 𝑷𝟏
𝑷𝟏
Where: 𝑬𝒅 = Price elasticity of demand
𝑸𝟏 = Original quantity demanded
𝑸𝟐 = New quantity demanded
𝑷𝟏 = Original Price
𝑷𝟐 = New Price

Interpretation of the Elasticity Coefficient

You may interpret your computed elasticity as follows:
• Elastic – The result is greater than 1 (𝑬𝒅 > 𝟏), which means that spending is relatively priced
sensitive.
• Inelastic – The result is less than 1 (𝑬𝒅 < 𝟏), which means the slight or no change in quantity
demanded when the price of the commodity gets changed.
• Unitary Elasticity – The result is equal to 1 (𝑬𝒅 = 𝟏), which means that the spending changes are
proportionate with price changes.
• Perfectly Elastic – The result is infinite (𝑬𝒅 = ∞), which means that a change in price leads to an
unlimited change in the quantity demanded.
• Perfectly Inelastic – The result is equal to zero (𝑬𝒅 = 𝟎), which means that quantity
demanded/supplied remains the same when price increases or decreases.

5
Source: Quora. What is the best method to

https://www.quora.com/What-is-the-best-
sell luxury goods? Retrieved from

Elastic vs. Inelastic

method-to-sell-luxury-goods

In general, necessity commodities or essential items such as

foods, medicines, water, and electricity are price inelastic
while luxury products such as appliances, fashionable
jewelry, and car are price elastic.

Demand for necessity commodities is inelastic because of the

repeated purchase of these commodities for basic needs by the
Elastic
consumer. These products usually do not have substitutes and
https://www.tehrantimes.com/news/44324
9/Adequate-basic-commodities-reserved-
Source: TEHRAN TIMES. Retrieved from

always a part of the financial budget of the consumers. Thus,

the consumers' habit does not change even the price goes up
or goes down.

Conversely, demand happens to be elastic for luxurious

for-next-year-trade-min

commodities due to seldom purchase of these commodities.

When the prices of the commodity increase, the quantity
demanded decreases because people are not willing to spend
Inelastic more money on this product. At the same time, when the price
of the commodity decreases, the quantity demanded increases.
Hence, the price change leads to the substitute product available in the market to either increase or
decrease.

Example:
The price of face mask before COVID 19 is P4.00 at retail, leads to the total sales daily of 3,000 pieces
among all markets in the province of Camarines Norte. Because of the COVID-19 pandemic, the new
price for a face mask implemented. It goes up to P25, which leads to the total sales of 33,000 pieces.
What is the response of quantity sold to the change in the price of face masks?

Solution:
𝑸𝟐 − 𝑸𝟏 𝟑𝟑, 𝟎𝟎𝟎 − 𝟑, 𝟎𝟎𝟎 𝟑𝟎, 𝟎𝟎𝟎
𝑸𝟏 𝟑, 𝟎𝟎𝟎 𝟑, 𝟎𝟎𝟎 𝟏𝟎
𝑬𝒅 = = = = = 𝟏. 𝟗𝟎
𝑷𝟐 − 𝑷𝟏 𝟐𝟓 − 𝟒 𝟐𝟏 𝟓. 𝟐𝟓
𝑷𝟏 𝟒 𝟒

The price of face mask rises by P21, and the quantity sold increases by 30,000 pcs. The amount
increased by 5.25 or 525%, and the quantity sold increases by ten (10) times or 1,000%. The rate of
consumers' responses to the change in the price of the face mask is 1.9. It means that for every one
(1%) percent change in the amount of the product, the quantity demanded will increase by 1.9 or 190%.
It reflects that the change in consumers' demand is 190% as higher as the change in the price. Since the
computed elasticity of 1.9 is more than 1, therefore, the consumers' demand is elastic.

Note: In case your computed elasticity coefficient is a negative number, you ignore the negative sign.
It is due to the inverse relationship between price and quantity demanded.

In addition to the price elasticity of demand, economists also use other elasticities to describe the
behavior of buyers in a market: income elasticity and the cross-price elasticity

6
 Income Elasticity of Demand
You can use the income elasticity of demand if you want to measure how the quantity demanded
changes as consumer income changes. You can compute the income elasticity by dividing the
percentage change in the number of goods demanded by the percentage change in income. That is,

𝑷𝒆𝒓𝒄𝒆𝒏𝒕𝒂𝒈𝒆 𝒄𝒉𝒂𝒏𝒈𝒆 𝒊𝒏 𝒒𝒖𝒂𝒏𝒕𝒊𝒕𝒚 𝒅𝒆𝒎𝒂𝒏𝒅𝒆𝒅

𝒆𝒚 =
𝑷𝒆𝒓𝒄𝒆𝒏𝒕𝒂𝒈𝒆 𝒄𝒉𝒂𝒏𝒈𝒆 𝒊𝒏 𝒊𝒏𝒄𝒐𝒎𝒆

𝑸𝟐 − 𝑸𝟏
𝑸𝟏
𝒆𝒚 =
𝒀𝟐 − 𝒀𝟏
𝒀𝟏
Let:
Q2 = 170 Y2 = 9,000
Q1 = 140 Y1 = 7,000

Solution:
𝑸𝟐 − 𝑸𝟏 𝟏𝟕𝟎 − 𝟏𝟒𝟎 𝟑𝟎
𝑸𝟏 𝟏𝟒𝟎 𝟏𝟒𝟎 . 𝟐𝟏
𝒆𝒚 = = = = = . 𝟕𝟓
𝒀𝟐 − 𝒀𝟏 𝟗, 𝟎𝟎𝟎 − 𝟕, 𝟎𝟎𝟎 𝟐, 𝟎𝟎𝟎 . 𝟐𝟗
𝒀𝟏 𝟕, 𝟎𝟎𝟎 𝟕, 𝟎𝟎𝟎

What is 𝒆𝒚 =. 𝟕𝟓? The income elasticity of .75 means that for every one percent (1%) increase in
income, the quantity demanded will increase by .75 or 75%. Since income elasticity of .75 is less than
1, therefore, income is inelastic, and the good is inferior.

If the income elasticity is more than one (1), income is elastic, and the good is superior. If the income

https://mru.org/dictionary-economics/normal-goods-economics
elasticity is lesser than one (1), it is inelastic, and the product is inferior, and if it is equal to one (1), it
is unitary, and the good is normal.

Source: MRU. What are normal goods? Retrieved from

Work. Retrieved from https://fresnoautobody.com/2019-

Superior Goods Normal Goods

Source: Superior Auto Body. 2019’ s Top Fresno Auto Body

Unitary
(𝒆𝒚 = 𝟏)
top-body-shop-fresno-superior-auto/

Elastic
(𝒆𝒚 > 𝟏)

Inferior Goods

Inelastic
(𝒆𝒚 < 𝟏)

Source: Ukay-Ukay Trend Land Adventure. Retrieved from

https://madeinphilippineshandicrafts.wordpress.com/2017/04/2
0/ukay-ukay-trend-land-adventure/ 7
 Cross Price Elasticity
You can use the cross-price elasticity of demand if you want to measure how the quantity demanded of
one product changes as the price of another product change. You can compute it by dividing the
percentage of change of quantity demanded of Good A to the percentage change in the price of Good
B. That is,
𝑷𝒆𝒓𝒄𝒆𝒏𝒕𝒂𝒈𝒆 𝒄𝒉𝒂𝒏𝒈𝒆 𝒊𝒏 𝒒𝒖𝒂𝒏𝒕𝒊𝒕𝒚 𝒅𝒆𝒎𝒂𝒏𝒅𝒆𝒅 𝒐𝒇 𝑮𝒐𝒐𝒅 𝑨
𝒆𝒄 =
𝑷𝒆𝒓𝒄𝒆𝒏𝒕𝒂𝒈𝒆 𝒄𝒉𝒂𝒏𝒈𝒆 𝒊𝒏 𝒑𝒓𝒊𝒄𝒆 𝒐𝒇 𝑮𝒐𝒐𝒅 𝑩

𝑸𝟐𝑨 − 𝑸𝟏𝑨
𝑸𝟏𝑨
𝒆𝒄 =
𝑷𝟐𝑩 − 𝑷𝟏𝑩
𝑷𝟏𝑩
Where:
𝑸𝑨 = 𝑸𝒖𝒂𝒏𝒕𝒊𝒕𝒚 𝑫𝒆𝒎𝒂𝒏𝒅𝒆𝒅 𝒐𝒇 𝑮𝒐𝒐𝒅 𝑨
𝑷𝑨 = 𝑷𝒓𝒊𝒄𝒆 𝒐𝒇 𝑮𝒐𝒐𝒅 𝑩
Example:
Q1A = 400 P1B = P 90
Q2A = 300 P2B = P 110
Solution:
𝑸𝟐𝑨 − 𝑸𝟏𝑨 𝟑𝟎𝟎 − 𝟒𝟎𝟎 𝟏𝟎𝟎
−
𝒆𝒄 =
𝑸𝟏𝑨
= 𝟒𝟎𝟎 = 𝟒𝟎𝟎 = −. 𝟐𝟓 = −𝟏. 𝟏𝟑
𝑷𝟐𝑩 − 𝑷𝟏𝑩 𝟏𝟏𝟎 − 𝟗𝟎 𝟐𝟎 . 𝟐𝟐
𝑷𝟏𝑩 𝟗𝟎 𝟗𝟎

What 𝒆𝒄 = −𝟏. 𝟏𝟑? It means that for every one percent (1%) increase in the price of Good B, there is
an increase in the quantity demanded of Good A by 113%. Since the computed cross elasticity is
negative, therefore Good A and B are complements goods, indicating that an increase in the price of
Good A reduces the quantity of Good B demanded.

Good A and B are related products; they are either as substitutes or as complements products.

•When the cross-price elasti- •If cross-price elasticity is

city is positive, Good A and B
are substitutes. An increase in
the price of Good B will cause
consumers to purchase more
negative, Goods A and B are
complements and are used
together. If the price of Good
B increases, the demand for
https://jackiekchantal.weebly.com/
Information About Supply & Demand .

of Good A as the substitute Good A decreases.

Source: Jackie Chantal Sandrine & Sauhline .

good, thus causing the

quantity of Good A to
increase.

Substitutes Complement
Goods
Retrieved from

Goods

Source: Market Business News

(MBN). What are substitute goods?
Retrieved from
https://marketbusinessnews.com/finan
cial-glossary/substitute-goods-
definition-meaning/

8
https://www.chinimandi.com/sugar-up-on-robust-demand/
Source: ChiniMandi. Sugar Up On Robust Demand.

ELASTICITY𝒆 OF SUPPLY

The producers or sellers of a good tend to sell more goods and

March 21, 2018. Retrieved from

services when prices are higher. However, their reactions also vary
depending on their ability to produce at a given time. The varying
responses of producers or sellers can measure by the price
elasticity of supply.

Price Elasticity of Supply

The price elasticity of supply measures how much the quantity
supplied responds to changes in the price. In other words, the
price elasticity of supply is equal to:
𝑷𝒆𝒓𝒄𝒆𝒏𝒕𝒂𝒈𝒆 𝒄𝒉𝒂𝒏𝒈𝒆 𝒊𝒏 𝒒𝒖𝒂𝒏𝒕𝒊𝒕𝒚 𝒔𝒖𝒑𝒑𝒍𝒊𝒆𝒅
𝑬𝒔 =
𝒑𝒆𝒓𝒄𝒆𝒏𝒕𝒂𝒈𝒆 𝒄𝒉𝒂𝒏𝒈𝒆 𝒊𝒏 𝒑𝒓𝒊𝒄𝒆

𝑸𝟐−𝑸𝟏
Where: 𝑷𝒆𝒓𝒄𝒆𝒏𝒕𝒂𝒈𝒆 𝒄𝒉𝒂𝒏𝒈𝒆 𝒊𝒏 𝒒𝒖𝒂𝒏𝒕𝒊𝒕𝒚 𝒔𝒖𝒑𝒑𝒍𝒊𝒆𝒅 =
𝑸𝟏
𝑷𝟐−𝑷𝟏
𝑷𝒆𝒓𝒄𝒆𝒏𝒕𝒂𝒈𝒆 𝒄𝒉𝒂𝒏𝒈𝒆 𝒊𝒏 𝒑𝒓𝒊𝒄𝒆 =
𝑷𝟏

Therefore:
𝑸𝟐 − 𝑸𝟏
𝑸𝟏
𝑬𝒔 =
𝑷𝟐 − 𝑷𝟏
𝑷𝟏
Example:
Suppose that the price of rice increase from P35 to P40 per kilo that encouraged the farmers to produce
more “palay” from 126,0000 to 180,000 sacks per semester.
Solution:
𝑸𝟐 − 𝑸𝟏 𝟏𝟖𝟎, 𝟎𝟎𝟎 − 𝟏𝟐𝟔, 𝟎𝟎𝟎 𝟓𝟒, 𝟎𝟎𝟎
𝑸𝟏 𝟏𝟐𝟔, 𝟎𝟎𝟎 𝟏𝟐𝟔, 𝟎𝟎𝟎 . 𝟒𝟑
𝑬𝒔 = = = = = 𝟑
𝑷𝟐 − 𝑷𝟏 𝟒𝟎 − 𝟑𝟓 𝟓 . 𝟏𝟒
𝑷𝟏 𝟑𝟓 𝟑𝟓

Based on the above example, the elasticity of 3 reflects the fact that the quantity supplied moves
proportionately thrice (3x) as much as the price. Since the price elasticity of 3 is more than 1, therefore,
supply is elastic.

If the elasticity is less than 1, then the supply is inelastic. It indicates that the quantity supplied moves
proportionately less than the price. If the price elasticity is greater than 1, then the supply is elastic. It
means that the aggregate supply shift proportionately more than the price.

9
 VI. PRACTICE TASKS

PRACTICE TASK 1

Solve the elasticity given the following demand and supply information of product X. Indicate whether
these are elastic or inelastic. Show your solution and write it including your answer on the separate
paper.
1. Demand Information
Quantity
Price Demanded

1 P 360 310
2 P 300 115

2. Supply Information
Quantity
Price Supplied
https://wikiclipart.com/question-

1 P 1,115 640
2 P 850 525
Source: WikiClipart.

mark-clipart_3780/

PRACTICE TASK 2

Calculating Elasticity of Supply

Complete the table below by calculating each missing supply value. Is the supply elastic or inelastic?
Copy the table and write your answer on a separate paper.
SUPPLY ELASTICITY OF PAN DE SAL
Price per Percent Quantity Percent Elastic Or
Dozen Change Supplied Change Elasticity Inelastic
8 100
7 12.5% 90 10.0%
6 14.3% 80 11.1%
5 16.7% 70 12.5%
4 20.0% 60 14.3%
3 25.0% 50 16.7%
Sources: Applied Economics _An Introduction. CENGAGE pg.180

10
 Practice Task 3

Calculating Elasticity of Demand

Read the information below and write your answer on a separate paper.
Suppose the demand schedule of your family for rice in a year as follows:
Quantity Demanded Quantity Demanded
Price/Kilo (Income = P15,000) (Income = P20,000)
100 400 500
80 850 1,000
60 1,300 1,500

https://www.tpsnva.org/handbook/part3/ch6/types_materials.php
40 1,800 2,000

Source: Teacher with Primary Sources. Types of Materials in the Primary

20 2,300 2,500
1. Compute the price elasticity of demand as the price of rice increases from P80 to P100 if (𝒀𝟏) your
income is P15,000, and (𝒀𝟐) your income is P20,000.
2. Compute your income elasticity of demand as your income increases from P15,000 to P20,000 if
(𝑷𝟏) the price is P60, and (𝑷𝟐) the price is P20.

Source Lesson Plan Collection. Retrieved from

3. Interpret your derived elasticity for #1 and #2 and indicate whether these are elastic or inelastic.
Source: Mankiw NG. Principles of Economics, 5th edition.
eBook. http://www.ccebook.cne

VII. POST TEST

REVIEW OF ECONOMIC CONCEPTS

Multiple Choice
Choose the letter of your correct answer and write it on the separate paper.
1. The coefficient of demand relates a percentage change in quantity demanded of Good A in response
to a percentage change in the price of Good B:
a. Cross Elasticity of Demand b. Cross Elasticity of Supply
c. Income Elasticity of Demand d. Price Elasticity of Demand
2. What elasticity of demand would be exhibited in a situation where a nation is suddenly struck by an
economic crisis, affecting the jobs of everyone?
a. Cross-Price Elasticity of Demand b. Demand Elasticity
c. Income Elasticity of Demand d. Price Elasticity of Demand
3. Which of these products is most likely to have elastic demand
a. A particular brand of hand soap c. Ground black pepper
b. Cable television service d. Taxi service in a large city
4. If 1 percent change in price results in a 3 percent change in the quantity of the product that is supplied,
the supply of that product is _______________.
a. Elastic b. Inelastic c. Perfectly elastic d. Perfectly Inelastic
5. When the % change in price is lesser than the % change in quantity demanded, the demand is said to
be:
a. Elastic b. Inelastic c. Unitary d. Perfectly Elastic

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 APPLY ECONOMIC CONCEPTS

Calculating Elasticity
Complete the table below by calculating each missing supply value. Is the supply elastic or inelastic?
Copy the table and write your answer on a separate paper.

Price per Percent Quantity Percent Elastic Or

Dozen Change Supplied Change Elasticity Inelastic
30 20.0% 50 100.0%
35 16.7% 75 50.0%
40 14.3% 100 33.3%
45 12.5% 125 25.0%
50 150
55 175

VIII. ADDITIONAL ACTIVITIES

Source: Thecuriousecon.. The Curious Economist.

https://twitter.com/thecuriousecon1

PROBLEM AND APPLICATION

Read the information below and write your answer on the separate
paper.
1. Food and beverage industries are the most affected business
establishments during the COVID-19 pandemic. A thousand of
restaurants are closed. Consumers prefer spending on food for take-
Retrieved from

home or delivery rather than spending on restaurant meals. Can a

restaurant survive at a slow re-opening of the economy? How would
you explain these circumstances by applying the concept of
elasticity?
2. Look for the price of the following commodities. Compare the percentage change in price and
provide comments thereon. Apply the concept of elasticity in your comments for the possible
reason for changes in market pricing.

PRICE Comments
Product 2019 ECQ New Normal

Rice
Bread
Meat
Soap
Carrots

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 IX. ANSWER KEY

I. Test Yourself
1. b 2. c 3. b 4. a 5. c

II. Learning Activity

Sample of possible answers:
1) Why should I buy a hand sanitizer if it is very expensive and there is another cheaper hygiene
product like soap and alcohol?
2) I never used a hand sanitizer in my life, why should I buy that, especially if that cost much?
3) I still buy a hand sanitizer if it is necessary even it’s expensive. It is more practical to buy it
rather than paying high bills in the hospital because of the COVID-19 virus.
4) Yes, I still buy a hand sanitizer even if it costs much because I need it to save my life from the
threat of the COVID-19 virus.
5) Yes, I’m still buying it because I always outside the house for work. I need it for my health
protection.

III. PRACTICE TASK 1

1. 3.77 or 3.8 elastic
2. .76 inelastic

PRACTICE TASK 2
SUPPLY ELASTICITY OF PAN DE SAL
Price per Percent Quantity Percent Elastic or
Dozen Change Supplied Change Elasticity Inelastic

8 11.1% 100 9.1% 0.82 Inelastic

7 12.5% 90 10.0% 0.80 Inelastic

6 14.3% 80 11.1% 0.78 Inelastic

5 16.7% 70 12.5% 0.75 Inelastic

4 20.0% 60 14.3% 0.72 Inelastic

3 25.0% 50 16.7% 0.67 Inelastic

IV. PRACTICE TASK 3

1. 1.65 elastic
2. 2.77 elastic

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 V. POST TEST
Review of Economics Concept
Multiple Choice

1. a 2. c 3. d 4. b 5. a

Apply Economic Concepts

Price per Percent Quantity Percent Elastic or

Dozen Change Supplied Change Elasticity Inelastic

30 20.0% 50 100.0% 5.00 Elastic

35 16.7% 75 50.0% 3.00 Elastic

40 14.3% 100 33.3% 2.33 Elastic

45 12.5% 125 25.0% 2.00 Elastic

50 11.1% 150 20.0% 1.80 Elastic

55 10.0% 175 16.7% 1.67 Elastic

VI. ADDITIONAL ACTIVITIES

Rubric for Essay Questions/Answers

Criteria 1 2 3 4
Understanding of Explain limited Explain some Explain considerable Demonstrates
the Topic understanding of understanding of understanding of thorough
topic. topic. topic understanding of
topic.
Quality and Clarity Unfocused, illogical Lacks of focus or Shows some depth Explores the issues
of Thought or incoherent. confused on own and complexity of thoughtfully and in
ideas. thought depth.
Application of No concept of Apply at least 2 Apply 2-3 concepts Apply 4 or more
Elasticity Concept elasticity applied. concepts of elasticity. of elasticity. elasticity concepts.

Clear Claim with No clear reason are Claim is clear, but the Claim and reason are Claim is clearly
Reasons given reason are unclear, clearly stated. stated and the reasons
absent, or incomplete are strong.
Explanation Contains little or no Attempts to explain Clearly explains and Clearly concisely,
explanation or analy- and analyze the analyzes most of the and thoroughly
sis of information. information but the information. explains and analyzes
explanation is unclear the information.
or inaccurate.

14
 REFEFENCES:

• N. Gregory Mankiw. Principle of Economics. E-book CCebook. http://www.ccebook.cn.

• Edilberto B. Viray Jr. & Jesusa Avila-Bato. Applied Economics for SHS ABM.
Mandaluyong City. Anvil Publishing Inc. 2018.
• CENGAGE. Applied Economics – An Introduction for SHS ABM Strand (Philippine
Edition). CENGAGE LEARNINGS
• Roman D. Leaῆo, Jr. Applied Economics for Senior High School.

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