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Lesson 3.3 Elasticity of Demand
Key Terms
elasticity of demandinelasticelasticunitary elastictotal revenue-
Academic Vocabulary
Dramatically: in a way or to an extent that draws attention
Drastically: in an extreme or exaggerated way
Precise: exact
Relatively: in relation or comparison to something else
Elasticity Defined: Text
1.
Use Visual Information Use Figure 3.4 to answer the following: If the cost
of gasoline increases from $3.00 per gallon to $4.00 per gallon and the
quantity demanded decreases from 12 gallons to 10 gallons, would the
demand be elastic or inelastic?
2.
Determine Central Ideas Read the section “Price Range.” Why do you
think people are more willing to pay 50 percent more for a product that
increases in price from 75 cents to $1.00 than a product that increases from
$5.00 to $7.50, also an increase of 50 percent?
Factors Affecting Elasticity: Text
3.
Categorize If a person is willing to give up her yearly two-week cruise in
the Caribbean due to a price increase, her action illustrates which factor
affecting elasticity? Explain your answer.
4.
Categorize Which factor affecting elasticity explains why a person may
continue to purchase gasoline even though the price rises sharply?
How Elasticity Affects Revenue: Text
5.
Identify Cause and Effect Complete the graphic organizer to illustrate
what happens to revenues when the elasticity of demand and change in
price are considered.
Demand is inelastic.
Price rises.
Demand is elastic.
Price rises.
6.
Determine Central Ideas Read “How Elasticity Affects Pricing Policies.”
Explain why a business owner needs to understand elasticity of demand for
his or her good or service when considering price changes.
Lesson 3.4 Fundamentals of Supply
Key Terms
Supplylaw of supplyquantity suppliedsupply schedulevariablemarket supply schedulesupply curvemarket supply curveelasticity of supply-
Academic Vocabulary
Govern: to control or regulate
Generate: to create or make happen
Yield: to produce in return for some investment of labor, money
The Effect of Price on Supply: Text
1.
Paraphrase Read the section “Law of Supply,” and then state the law of
supply in your own words.
Understanding Supply Schedules: Text
2.
Draw Inferences Look at Figure 3.8. Why is there no quantity supplied at a
price less than $1 per slice?
3.
Compare and Contrast Why are the supply curve and the market supply
curve the same except for the quantity supplied?
4.
Compare and Contrast Look at Figure 3.10, and compare it to Figure 3.2
in Lesson 1. How does a supply curve differ from a demand curve, and how
is the difference related to increases in price?
Elasticity of Supply: Text
5.
Explain an Argument Read “Elasticity of Supply Over a Longer Time.”
How does the reading explain that elasticity of supply tends to increase over
time?