Christine Mazzocchi- Blog Post 4

Lesson Plan:

Objective:

Our objective today is to understand what elasticity means, how the formula is used, and how we can apply this to real life situations. 

Timing:

This lesson would take approximately one full class period-> one hour and fifteen minutes. 

Vocabulary:

Elasticity, Quantity, Price, and understand what the symbol for “change in” is. 

Layout of Class:

Students will first listen to my lecture and then have time to share ideas with their groups about how they might use elasticity. Then, students will be given a worksheet to work on with their group mates which will be collected by the end of class so that I can assess their knowledge. 

Opening Statement: 

Hi class and welcome to Applied Calculus!! My name is Professor Mazzocchi and today I am going to teach you about elasticity. Don’t worry too much, but as long as you pay attention to me, you will succeed:) 

Lecture:

First of all, let me give you the textbook definition of elasticity. Elasticity is defined as  a way to measure the sensitivity of demand to price changes. For example, increasing the price of a car by $1 is insignificant, but if it were a lightbulb, it is more significant. This means that to look at this sensitivity, we must look at the change in price and the change in quantity demanded. Something that will be helpful to know is that the delta symbol (looks like a triangle) is an easier way to express “change in.” So, after receiving that information, who thinks they can come up with a formula for elasticity? Remember, we are trying to express the effect of a price change on demand. (Wait for students to think and come up with a response; Call on a student whose hand is raised) So, as a class we have decided that the formula for elasticity is | (% change in quantity demanded) / (% change in price) |. As shorthand, we can write the equation as | (delta q/q)/ (delta p/p)|. This equation can also be written as | (p/q) x (delta q/ delta p) |. 

After talking about all of this equation nonsense, wouldn't you want to know how we can relate this to everyday scenarios. Yes? Perfect! Well, regardless if you are excited or not, we are going to talk about real life applications. Okay, let’s get started:) Once you input all of your information into the equation, if your elasticity<1, demand is inelastic and revenue is increased by raising the price. On the other hand, if the elasticity>1, demand is elastic and revenue is increased by lowering the price.  

Tip:

For the first equation, you can think of the ordering of the letters as: Q over P or Queens over peasants. Also don't forget, D comes before Q and P in the alphabet, so delta q and delta p come before just the plain letters. Therefore your equation would be | (delta q/q)/ (delta p/p)|. 

Practice Problems:

1) Paige owns a hat shop. She charges $25 for her crocheted koala hats. Her sister Nicole, figures out the elasticity of demand for her koala hats to be 4.5. If Paige wants to increase the revenue, what should she do? 

ANSWER: Paige needs to lower her price because her elasticity of demand is greater than one. If Paige lowers her price, she will end up selling more koala hats. Since she is selling more hats, her revenue will increase, which makes up for her low price. 

2) Consider the following example: 

The Museum of Natural History raises the price of their tickets from $7 to $15 per adult ticket. This increase in price reduces their weekly sales from 800 tickets to 700 tickets. 

- Figure out the elasticity of demand for tickets at the price of $7 per ticket. 

-Should the Museum of Natural History raise the price of their tickets? Provide an explantation for your response. 

ANSWER: E = | (change in q/q) / (change in p/p) | 

E= | (100/800) / (8/7) |

E= .125/ 1.14285714

E= .109

Since the elasticity is less than one, it is inelastic. This means that the Museum of Natural History should raise their prices because it is inelastic and revenue will be increased by raising the price. 

Conclusion:

I really enjoyed teaching this lesson for this class and I hope that you learned a lot! Now you know everything you need to know about elasticity.  If you have an further questions, feel free to stay after class to ask me or come to my office hours. Have a great rest of the day and see you tomorrow!