Price+Elasticity+of+demand

Supply and demand • Price determination Evaluate the impact of changes in the conditions of supply and demand

Elasticity you will learn about: • Price elasticity • Income elasticity • Cross-elasticity • Advertising elasticity • Relationship of elasticity with product life cycle

=HL Extension - Price Elasticity of Demand=

To begin - read the article below: • When iPhone Apps Are Reduced In Price.docWord document • With a partner, discuss: What are the key concepts mentioned? What is increasing when the price drops? Explain the relationship between the two main concepts.

• The Concepts of Demand and supply "The demand for normal goods is said to have an inverse relationship with price, whereas the supply of these normal goods tends to have a positive relationship with price."

Take 1 minute to research and define the key terms in this statement and share your findings. Using the axis of price ($) and quantity demanded, draw how this 'inverse' and positive relationship might look and be ready to explain your thinking.

"So, what determines the level of demand for a product?" Aside from price, discuss and list down all the things that might influence the demand for a product. Key thought: Does an increase in price always lead to a drop in demand? If not why not? "What determines the level of supply then?" Clearly, price going up tends to mean suppliers produce/supply more, but what else can cause the level of supply to increase? Feedback through Speed geeking - One member from each group will go to the other group as an ambassador to teach their new learning. Make notes and be ready to teach the ambassador from your group when they return!
 * Task 1** - 10 minutes of skillful research, sharing and some more sharing!
 * Group 1 -**
 * Group 2 -**

Let's keep things balanced by investigating equilibrium (see what I did there?) Both groups have 5 minutes to research and create a 45 second 'sales pitch' style monologue explain to me, using a business example (made up if you like!) what equilibrium is and why, if left to its own devices, a market always makes its way to the equilibrium price.
 * Task 2**

Groups have 6 minutes to answer: Hurricane Katrina In 2005 Hurricane Katrina caused a six-month halt to oil operations near America's Gulf Coast, affecting about a quarter of the USA's oil production. Shell, for example, announced a fall in production of 420,000 barrels of oil each day. Subsequently, oil prices soared.
 * Task 3** - did you get what you need?

a) identify two determinants for the demand for oil [2] b) explain how natural disasters, such as Hurricane Katrina can push up oil prices. [4]

Self-assess - what do you think you achieved? Peer-assess - review the other groups - do you agree with their mark?

Elasticity of demand 1 - See the attachment below, as a group read through and reduce the content to a 100 word summary without losing meaning. 2 - Now reduce it to 50 key words, this can be bullet points if necessary 3 - Finally, reduce the text to 10 of the most important words - Hint: what is the formula?
 * Task 4 - Plenary exercises**