Worksheet on Elasticity - West Ada School District
Name____________________ P.____
Worksheet on Elasticity
Step 1 - E L A S T I C or INELASTIC?
Price Elasticity of Demand is a measure of how responsive demand is to a change in price. If a price change leads to a considerably bigger change in quantity demanded, we would consider the good to be responsive to a price change—hence elastic. If, however, a similar price change leads to a much smaller change in demand, we would consider it inelastic.
To get a more precise measure of the responsiveness to a price change we can calculate a value for price elasticity of demand. We use the formula:
|PRICE ELASTICITY OF DEMAND = |percentage change in Q demand |
| |percentage change in price |
|PERCENTAGE CHANGE= |Original Number-New Number X 100 |
| |Original Number |
| | |
Use the formula above to calculate values of Price Elasticity for all the situations below:
|Price |Quantity |% change in quantity demanded |% change in price |Elasticity of Demand |
|Initial |New |Initial |New |
|Initial |New |
|Elastic | |
|Inelastic | |
If the company wants to estimate the value of the price elasticity of their product, then they need to judge it against the following criteria:
• Number of ____________________:
o Strength of ___________________:
• Luxuries vs. ___________________:
• Percentage of ________________ spent on good:
• _____________ to adjust:
Judge the products in the table below to decide whether you think they will be elastic or inelastic:
|Product |Elastic or inelastic? |Why? |
|Salt | | |
|Hawaiian Vacation | | |
|Apple iPhone | | |
|Cigarettes | | |
|Tap Water | | |
|Gasoline | | |
|Dasani Water | | |
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