Using the e-World to Teach the Real World, by Troy D. White
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The document provides a comprehensive guide on teaching elasticity of demand using technology and active lessons for personal finance and economics in the classroom. It explains the concept of price elasticity of demand, its definitions, and the effects of price changes on quantity demanded. Additionally, it offers teaching tips, misconceptions to address, and resources for further learning on the subject.
Using the e-World to Teach the Real World, by Troy D. White
- 1. Using the e-World to Teach the Real World The Latest Tools for Infusing Personal Finance and Economics into Your Classroom Today You'll Discover How To: 1. Use technology to boost your teaching productivity 2. Build your knowledge base of (and comfort with) economic and personal finance concepts 3. Improve your core courses with economic and personal finance content Troy White, Director of Sales and Marketing Pathways to Success 2008 National Council on Economic Education Career & Technical Education Conference twhite@ncee.net 212-730-1791 work Ramkota RiverCentre 917-270-0634 cell Pierre, SD
- 2. Let's choose Elasticity of Demand...
- 3. "Overview" tab – a definition used to teach the concept of Elasticity of Demand Price elasticity of demand is the way of measuring how much quantity demanded will change in response to a change in price. The formula for price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price. The advantage of measuring elasticities in terms of percentage change is that the specific units being used to measure the quantity and the price don't matter--only the percentages. If the elasticity of demand is greater than 1, then a price increase of, say, 10 percent will cause a decrease in quantity demanded of more than 10 percent. This case is referred to as elastic demand. If the elasticity of demand is equal to 1, then a price increase of 10 percent will cause a decrease in quantity demanded of 10 percent. This case is referred to as unitary elasticity of demand. Finally, if the elasticity of demand is less than 1, then a rise in the price of 10 percent will result in a decrease in quantity demanded of less than 10 percent. This case is referred to as inelastic demand. In other words, elastic demand refers to a relatively large response of quantity demanded to changes in price, while inelastic demand refers to a relatively small response of quantity demanded to change in price. Knowing the elasticity of demand is useful when determining the effects of price changes on quantity demanded. A firm has more power over price changes if demand is inelastic. Price elasticity of demand is always a negative number, since a higher price leads to lower quantity demanded and vice versa. However, it is common practice to ignore the negative sign, so don't be surprised if you see it expressed as a positive number.
- 4. Glossary for Elasticity of Demand Lesson – populated from Elasticity of Demand "Overview" section Price Elasticity of Demand The responsiveness of the quantity demanded of a good or service to changes in its price. The price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price. Quantity Demanded The amount of a good or service people will buy at a given price in a given period of time. Price The amount of money that people pay when they buy a good or service; the amount they receive when they sell a good or service.
- 5. "Lessons" Tab – finding activity-based lessons to demonstrate Elasticity of Demand A description of the lesson is included underneath the title...
- 6. After deciding the lessons under the "Lessons" tab weren't a good fit, we chose "view more high school lessons >>". Now we have 4 additional lessons to choose from, for a total of 7.
- 7. We're going to use "The Mystery of the Crazy Quilt Airfares" lesson from the "The Great Economic Mysteries Book" (see pages 11-13 for the lesson) We'll print the lesson, and we're ready for our in-class activity!
- 8. "Tips" Tab – helps us teach the concept Tip #1 Price elasticity of demand is the response of the quantity demanded to a change in price. A large response is called elastic demand while a small response is called inelastic demand. You can illustrate the different effects using two balls. Drop a baseball and see how much it bounces (inelastic demand). Then drop a tennis ball and see how much it bounces (elastic demand). Note that the baseball bounces but less than the tennis ball. Inelastic demand does not mean there is no response; it means there is a small response. The percentage change in the quantity demanded is less than the percentage change in price. Tip #2 Many students believe the myth of vertical demand. They think that for some goods a change in price will not influence the quantity demanded. They confuse no change with a percentage change in the quantity demanded less than the percentage change in price. This leads to poor logic. For example, "higher gasoline prices will not discourage gas consumption." Even in the short run, higher gasoline prices will discourage gas consumption even if the percentage decrease in the quantity demanded is less than the percentage increase in price. In the long run, consumers can find creative substitutes for gas such as more fuel-efficient cars or living closer to work, and the percentage decrease in the quantity demanded will be even greater. Tip #3 Even necessities with inelastic demand curves become more elastic if there are many firms competing to sell them. One firms product becomes a substitute for another firms product. Competition increases elasticity of demand. Tip #4 A quick activity is to make statements describing the characteristics of products, have the students determine if the product has an elastic or inelastic demand and explain why. Some products might be salt, insulin, steak, autos and yachts.
- 9. "Multimedia Demonstration" – video clip introduces/reinforces the concept (for you and your students)
- 11. Let's find an online lesson to extend our Elasticity of Demand lesson...
- 12. Using the e-World to Teach the Real World The Latest Tools for Infusing Personal Finance and Economics into Your Classroom Today You Discovered How To: 1. Use technology to boost your teaching productivity 2. Build your knowledge base of (and comfort with) economic and personal finance concepts 3. Improve your core courses with economic and personal finance content Resources Included: Virtual Economics -- http://ve.ncee.net Thinking Economics -- http://www.thinkingeconomics.com EconEdLink -- http://www.econedlink.org Troy White, Director of Sales and Marketing Pathways to Success 2008 National Council on Economic Education Career & Technical Education Conference twhite@ncee.net 212-730-1791 work Ramkota RiverCentre 917-270-0634 cell Pierre, SD