Elasticity of

Demand
by
Ms. Sokaina Darazy
Objectives of This Lesson

01 Identify Price Elasticity

02 Differentiate between Elastic and

Inelastic
Calculate the Price Elasticity
03 Demand through the Mid Point
Method
 How would you respond?

• If the price of Diamonds dropped by 25%, how

likely would you be to buy more Diamonds?

• If the price of a Starbucks lattes increased by

50%, how likely would you be to buy fewer lattes?
 01

02

03

01
Identify Price
Elasticity
Look at this illustration and explain:
 01

02

03

How can you define

price elasticity of
demand?
 So,
The price elasticity of demand
measures how much the
quantity demanded will
change when price changes.
Example:
Calculate the point
elasticity of demand as
price decreases from
point A to point B.

B
First calculate change in
quantity

7–3
B
= ---------- = 0.8
(7+3)/2
Second calculate change
in price

1.5 – 2.5
B
= -------------- = -0.5
(1.5+2.5)/2
Third complete the
formula

0.8
B
= -------------- = 1.6
-0.5

By convention we always talk about

elasticities as positive numbers so take
the absolute value.
What type is this?

0.8
B
= -------------- = 1.6
-0.5
 01

02

Group activity 03

• Work in a group of 2-3

• Read the provided article taken from the Mackinac
Center for Public Policy website
• Use the table in the article to answer the questions
What determines if a product is elastic or not?
 01

02

03

Inelastic Demand
1
It means that
Elastic Demand consumers are
It means that consumers insensitive to a
are sensitive to a change change in price
in price
 Assessment

Solve the provided

worksheet separately.
Summary
 01

02

THANKS! 03

DOES ANYONE HAVE ANY QUESTIONS?

CREDITS: This presentation template was created by Slidesgo, including icons by

Flaticon and infographics & images by Freepik