Topic: Determination of Market price and Elasticity

Teaching skill/strategies: Question and answer, deductive methods and activity based
Date: 21/07/2014 Class: IX B
Previous knowledge of the pupils: They have learned about demand and supply.
Evaluation technique: Questioning and Answering.

Lesson Objectives
1) Define Price elasticity of demand by their own words with example.
2) write the formula to calculate the price elasticity of demand
3) Discuss the meaning of elastic, inelastic and unitarily elastic after teaching.

Introduction
Recapitulate the previous lesson and introduce the topic to the class, check the homework given
in previous class.

Lesson development

Explains the meaning of price elasticity of demand (Price elasticity of demand is a mean and
measure the percentage change in quantity demanded brought about by a percentage change in
that particular commoditys price).

Price elasticity= % change in quantity demanded
% change in its price

New Qtty (Q1) Original Qtty (Q0) X 100
Original Qtty (Q0)

New price (P1) Original price (P0) X 100
Original price (P0)

Explains the calculation of price elasticity of demand with an example.
Solve the example to understand better to the student.

Example:
Mr. Dorji purchase 20 Kgs of rice at Nu 40 per Kg. further, a month later he bought 25 Kgs of
same rice at Nu. 35 per Kg. calculate the price elasticity of demand.

Sol.
Original Qtty (Q0) = 20 Kg
New Qtty (Q1) = 25 Kg
Original Price (P0) = Nu. 40
New Price (P1) = Nu. 35


Ep = % change in quantity demanded
% change in its price

Q1 Q0 X 100
(Q0)
=
P1 P0 X 100
P0

25 20 X 100
20
=
35 40 X 100
40

5 X 100
20
=
- 5 X 100
40

= 25/- 12.5

Ep = - 2

Note: (Here we ignore the negative sign and take into account only the numerical value of elasticity. In
this case, elasticity can be read as 2)

Types of price elasticity:
- Elastic (Ep >1)
- Inelastic (Ep<1)
- Unitarily elastic (Ep=1)

GNH Values: sustainability, calculation of price and price determination into the market

Lesson Closure
Ask students to summarize the discussed topics and home work page no. 61 and work out with learning
activity 7.1.