1. At the end of the lesson, the students should
be able to:
 define price elasticity of demand and price
elasticity of supply
 identify the different types and
characteristics of demand elasticity
 identify the determinants of price elasticity
of supply and demand

2. At the end of the lesson, the students should
be able to:
 solve for the price elasticity of demand and
price elasticity of supply

5. price elasticity of demand
Measures the
responsiveness of demand
to changes in price

6. price elasticity of demand
Price elasticity
of demand = % change in quantity demanded
% change in price
ED = % Q
% P

7. price elasticity of demand
Q2 – Q1
ED = Q
P2 – P1
P

8. ratio of percentage
Q = Q 2 – Q1 P = P2 – P1
% Q = Q2 – Q1 % P= P2 – P1
Q P
Q = Q2 + Q1 P = P2 + P1
2 2

9. Characteristics
value type of demand Response to
change
0 Perfectly inelastic QD remains the
demand same
0-1 Inelastic demand Minimal change
in QD
1 Unitary elastic Change in price =

10. Characteristics
value type of demand Response to
change
1+ Elastic demand Bigger change in
QD
infi Perfectly elastic Any change in
nit price would lead
y to extremely big

11. Elastic
Inelastic
Unitary elastic

12. shape of demand according to elasticity

13. shape of demand according to elasticity

14. availability of substitutes
Demand is more elastic when there are more substitutes
importance of the item in the budget
Demand is inelastic when the product is a more
significant portion of the consumer’s budget
time frame
Demand can be more elastic over time

16. price elasticity of supply
Measures the responsiveness of
supply to the changes in price

17. price elasticity of supply
ES = % S
% P
ES = Q2 – Q1
Q
P2 – P1
P

18. price elasticity of supply
S = S2 – S1
P= P2 –P1
% S = Q2 – Q1 % P = P2 – P1
Q P
Q = Q2 + Q1 P = P2 + P1
2 2

19. Characteristics:
Value Type of supply Response to change in
price
0 Perfectly QS remains the same
inelastic supply
0-1 Inelastic supply Minimal change in QS
1 Unitary supply Change in price =QS

20. Characteristics:
Value Type of supply Response to change in price
1+ Elastic supply Bigger change in QS
Infinity Perfectly Any change in price
elastic supply would lead to
extremely big change
in QS

21. Agricultural goods
Manufactured goods

22. Seatwork

23. Compute for the price elasticity of
demand:
DEMAND FOR good Y
A: Q1= 160 ; P1 =110
B: Q2= 240 ; P2 =90

24. 1.Compute for the price elasticity of demand:
Q1= 200; P1= 11
Q2= 100; P2= 15
2.Compute for the price elasticity of supply:
Q1= 75;P1= 30
Q2= 175; P2= 31