Price Determination

Grade 11 · Economics

Semester 1 | Period 1 | Week 2

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Subject: Economics

Semester: 1

Period: 1

Week: 2

School Name:

Teacher’s Name:

Subject: Economics

Grade Level: Grade 11

Week & Period: Week 2, Period I

Date:

LEARNING OBJECTIVES

By the end of the lesson, learners should be able to:

  1. Define elasticity of demand and supply.
  2. Differentiate between price elasticity, income elasticity, and cross-price elasticity.
  3. Identify elastic and inelastic goods.
  4. Explain the real-world application of different elasticities.

 

INSTRUCTIONAL MATERIALS

  • Graph sheets
  • Diagrams of elastic and inelastic curves
  • Demand and supply tables
  • Charts comparing elasticities
  • Flashcards (elastic/inelastic examples)

 

ANTICIPATION (Warm-Up)

Ask students:
“Why does the price of luxury shoes rise sharply but not affect the quantity sold much?”
“Why do people still buy salt even when its price rises?”

 

MAIN LESSON: BUILDING KNOWLEDGE

Definitions:

  • Price Elasticity of Demand (PED): Measures how much quantity demanded changes in response to price changes.
    • Elastic Demand: A small price change leads to a big change in quantity demanded (e.g. luxury goods).
    • Inelastic Demand: A large price change leads to a small change in quantity demanded (e.g. salt, petrol).
  • Price Elasticity of Supply (PES): Measures how quantity supplied responds to price changes.
  • Income Elasticity of Demand (YED): Measures how quantity demanded changes as consumer income changes.
    • Normal goods: Positive income elasticity.
    • Inferior goods: Negative income elasticity.
  • Cross-Price Elasticity of Demand (XED): Measures how the demand for one good changes when the price of another good changes.
    • Substitute goods: Positive cross-price elasticity (e.g. Coke and Pepsi).
    • Complementary goods: Negative cross-price elasticity (e.g. pen and ink).

 

GRAPHICAL REPRESENTATION

  • Elastic Demand: Flat downward sloping demand curve
  • Inelastic Demand: Steep downward sloping demand curve
  • Use graphs to illustrate the various elasticity types.

 

ILLUSTRATIVE EXAMPLES

Price (USD)

Quantity Demanded

10

100

15

80

 

ACTIVITY

Card Sorting Game:

  • Students categorize products into elastic or inelastic groups with justification.
  • Example: luxury car, bread, toothpaste, cinema tickets, medicine.

 

ASSESSMENT (Classwork)

  1. Define price elasticity of demand.
  2. List two examples each of elastic and inelastic goods.
  3. Differentiate between income elasticity and cross-price elasticity.
  4. Why might a medicine be inelastic in demand?
  5. Explain the concept of complementary goods with examples.

HOMEWORK

  • Research and write a brief report on three goods with high price elasticity and three with low price elasticity in your local market.

 

EXPANDED NOTES

  • Government uses knowledge of elasticity to determine taxes (inelastic goods can be taxed more).
  • Businesses use it to set prices for maximizing revenue.

 

DIFFERENTIATION STRATEGIES

  • Visual aids (graphs and charts) for learners who struggle with abstraction.
  • Real-life product examples to relate to learner experience.

 

TEACHER’S REFLECTION

  • Were learners able to interpret elasticity graphs?
  • Did they grasp the difference between price elasticity and income/cross-price elasticity?