Price Elasticity of Demand and Supply
How strongly the quantity people buy or firms sell responds to a change in price: elastic and inelastic goods, what makes them so, and why it matters to sellers.
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How much does demand respond? 📈
When the price of a good changes, the quantity people buy also changes, but by different amounts for different goods. Price elasticity measures how strongly the quantity responds to a change in price. Some goods are elastic, where a small price change causes a big change in quantity, and some are inelastic, where the quantity barely moves.
Key words 🔑
Learn these four terms before you study elasticity.
Elastic or inelastic? 🆚
The response of quantity to price puts a good into one of two groups.
Grade 9 thinking 💡
Explain the reason and the result. In words, elasticity compares the percentage change in quantity with the percentage change in price. If a good has few substitutes and is a necessity, its demand is inelastic, so a seller who raises the price keeps most of its buyers and gains more revenue. For an elastic good the opposite is true.
Match the term 🔗
- price elasticity of demand
- elastic demand
- inelastic demand
- price elasticity of supply
- how much the quantity demanded responds to a price change
- quantity changes a lot when the price changes
- quantity changes little when the price changes
- how much the quantity supplied responds to a price change
Match the good to its demand 🧩
- a luxury holiday
- table salt
- one brand of crisps
- petrol for a car
- elastic, because it is not essential
- inelastic, because it is cheap with no real substitute
- elastic, because there are many other brands
- inelastic, because there are few substitutes
What is elastic demand? ❓
What does elastic demand mean?
- The quantity demanded changes a lot when the price changes.
- The quantity demanded changes very little when the price changes.
- The quantity demanded never changes at all.
What makes demand inelastic? ✅
Select the TWO things that make demand more inelastic.
- The good is a necessity.
- There are few substitutes.
- The good is a luxury.
- There are many substitutes.
Order the reasoning 🪜
An interactive activity.
Summarise elasticity 📝
Price _____ of demand measures how much the quantity demanded responds to a change in price. When demand is _____, a price change causes a big change in quantity, which is common for luxuries. When demand is _____, a price change causes only a small change in quantity, which is common for a _____. Demand tends to be more inelastic when there are few _____.
Count the kinds 🔢
An interactive activity.
Find the inelastic goods 🖍️
An interactive activity.
Elastic or inelastic? 🧭
An interactive activity.
Explain elasticity ✍️
An interactive activity.