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price elasticity

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4 detailed 50-minute lessons with teaching scripts, worked examples, parent guides, and assessment criteria.

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Lesson Overview

Total Lessons: 4
Tier: Foundation and Higher
Duration: 50 minutes per lesson (200 minutes total)
Exam Boards: AQA, Edexcel, OCR, Eduqas, CCEA

Learning Objectives

Prerequisites

Materials & Equipment

Lesson 1: Introduction: price elasticity

Duration: 50 minutes

Starter Activity (5 minutes)

Quick Recall

Write down everything you already know about price elasticity. Then check against the key terms: Economics Exam Tips. Use a mini-whiteboard or paper.

Main Content (35 minutes)

Parent/Teacher Guide:
Before lesson: Read the script below. Pre-teach key vocab: Economics Exam Tips.
If stuck: Re-read the revision notes (link above), then break the content into smaller steps.
Extension: See the Stretch & Challenge ideas in Lesson 4.
Teaching Script (35 mins):
Mins 0-5 - Hook: "Today: price elasticity. By the end you will be able to answer exam questions on it unaided. It connects to the rest of Economics because the ideas here recur across the spec."
Mins 5-20 - Direct Instruction: Work through the core ideas below one at a time; after each, ask your student to explain it back in their own words.
Mins 20-30 - Guided Practice: Model the worked example together, then let your student attempt the first practice question with guidance.
Mins 30-35 - Independent Practice: 2-3 practice questions from Lesson 3 below, with immediate feedback.
First Look

Start with the revision notes summary, then attempt: Calculate PED if price rises from £10 to £12 and quantity falls from 100 to 80. Is demand elastic or inelastic?

Plenary (5 minutes)

Check Out

Your student states one thing they learned and one question they still have about price elasticity.

Lesson 2: Core Concepts: price elasticity

Duration: 50 minutes

Starter Activity (5 minutes)

Review Previous Lesson

Quick recap: write 3 key points from Lesson 1 on price elasticity. Check them against the notes below.

Main Content (35 minutes)

Key Fact: PED = % change in quantity demanded / % change in price. |PED| > 1 = elastic; |PED| < 1 = inelastic.
Key Fact: Factors affecting PED: substitutes (more = more elastic), necessity vs luxury (necessities = inelastic), proportion of income (larger = more elastic), time (more elastic long-term).
Key Fact: PES = % change in quantity supplied / % change in price. PES > 1 = elastic supply; PES < 1 = inelastic. More elastic with spare capacity, easy switching, and longer time.
Key Fact: If demand is inelastic, raising price increases revenue (petrol, cigarettes). If elastic, raising price reduces revenue.
Key Fact: Inelastic demand for essentials means consumers bear the burden of price rises — hence government intervention (price caps, subsidies).
Economics Exam Tips: When applying elasticity, use the STIP framework: Substitutes available? Time period? Income proportion? Product type (necessity or luxury)? Elasticity determines whether price changes help or hurt producers and consumers.
TermMeaningExample
PEDResponsiveness of demand to price% change in Qd / % change in P
PESResponsiveness of supply to price% change in Qs / % change in P
YEDResponsiveness of demand to income% change in Qd / % change in Y
XEDResponsiveness of demand to other good's price% change in Qd of A / % change in P of B

Practice (10 minutes)

Q: Calculate PED if price rises from £10 to £12 and quantity falls from 100 to 80. Is demand elastic or inelastic?

Answer: %ΔP = (12-10)/10 × 100 = 20%. %ΔQ = (80-100)/100 × 100 = -20%. PED = -20%/20% = -1.0. Absolute value = 1 = unit elasticity. Total revenue stays the same.

Plenary (5 minutes)

Explain Back

Your student teaches the key points back to you without looking. Fill any gaps immediately.

Lesson 3: Application: price elasticity

Duration: 50 minutes

Starter Activity (5 minutes)

Quick Recall

Recall the key terms: Economics Exam Tips. Define each in one sentence.

Main Content (35 minutes)

Parent/Teacher Guide: Let your student attempt each question alone first, then compare with the model answer. Award method marks for correct working even if the final answer is wrong.

Q1: Calculate PED if price rises from £10 to £12 and quantity falls from 100 to 80. Is demand elastic or inelastic?

Answer: %ΔP = (12-10)/10 × 100 = 20%. %ΔQ = (80-100)/100 × 100 = -20%. PED = -20%/20% = -1.0. Absolute value = 1 = unit elasticity. Total revenue stays the same.

Q2: Explain three factors that make demand price inelastic.

Answer: Three factors: (1) Few substitutes (insulin for diabetics). (2) Necessity (bread, electricity, water). (3) Small proportion of income (salt, matches — price changes are insignificant).

Q3: Evaluate why understanding PED is important for a business setting pricing strategy.

Answer: If demand is inelastic, raise prices — quantity falls less than price rises, increasing revenue. If elastic, lower prices — quantity rises more than price falls, increasing revenue. PED varies by time period, market segment, and price level.

Plenary (5 minutes)

Error Review

Review any questions answered incorrectly. Identify whether the error was knowledge, method, or reading the question.

Lesson 4: Exam Practice: price elasticity

Duration: 50 minutes

Starter Activity (5 minutes)

Command Words

Review what these command words require: state (one point), describe (say what happens), explain (say why), compare (both sides), evaluate (judgement).

Main Content (35 minutes)

Extended Answer

Extended question: Full-Mark Response Evaluate whether a government should tax goods with inelastic demand or elastic demand to raise the most revenue. <div class="

A grade 9 response will: taxing inelastic goods raises more revenue (quantity barely falls); taxing elastic goods raises little (consumers switch); equity issue (inelastic goods like energy hit the poor hardest); conclude: tax inelastic goods for revenue efficiency but use revenue to fund progressive spending for equity.

Exam Tips: Always show the PED formula and working: (%ΔQd) / (%ΔP). | PED is NEGATIVE (law of demand), but we use the ABSOLUTE value for comparison. | Use the TOTAL REVENUE TEST: price rises and revenue rises = inelastic. Price rises and revenue falls = elastic.
Common Errors: Watch Out! Students often make mistakes here. Wrong: If a product is a necessity, its demand is always perfectly inelastic. Correct: Necessities have inelastic demand but rarely perfectly inelastic (PED = 0). Even essential goods show some response: if water prices rise dramatically, people use less for gardens. Perfectly inelastic demand is a theoretical extreme, not real for most goods.
Stretch & Challenge (Grade 8-9):
  • Synoptic links: explain how price elasticity connects to another Economics topic you have studied
  • Real-world: research one real-world use or example of price elasticity
  • Critical: "What are the limitations of the models used in price elasticity?"

Plenary (5 minutes)

Assessment Criteria
  • Got it: Confident explanation + correct worked examples
  • Getting there: Main points OK, needs support with detail
  • Not yet: Confused on key concepts - re-run Lesson 2

Homework & Consolidation

Recommended Resources

🎓 Smart Lesson (Guided)