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How Markets Work - Price Elasticity of Demand

Level:
AS, A-Level
Board:
AQA, Edexcel, OCR, IB

Last updated 22 Mar 2021

This is a revision presentation on price elasticity of demand

Price elasticity of demand

Normal laws of demand suggest that as prices increase demand decreases whilst firms attempt to supply more (with the opposite happening as prices decrease). The concept of elasticities asks the question 'by how much does demand and supply change?' Recent examination reports have made it clear that "price elasticity is an important topic and students should be prepared to apply it to the examination context as well as quote the formulas."

There is a lot to learn in this section – start with a good understanding of what elasticity it and how it is measured. Then consider why it matters for businesses to have a working knowledge / estimate of the coefficient of price elasticity of demand.

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