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Grade 9-12

Price Elasticity: From Tires to Toothpicks

Time: 60 mins,
Updated: April 5 2019,


Students will be able to:

  • Define price elasticity of demand.
  • Distinguish between elastic and inelastic demand.
  • Explain the factors that determine elasticity of demand for a specific good or service.

In this economics lesson, students will compare elasticity coefficients of consumer goods.



Open the PowerPoint Slides. Use the Speaking Notes for PPT or use the speaking notes in the slide deck to guide your students through the discussion. Show slide 2, and ask students to quick-write their responses to these three questions:

  1. If the price of Nikes dropped by 25%, how likely would you be to buy more Nikes?
  2. If the price of a Starbucks lattes increased by 25%, how likely would you be to buy fewer lattes?
  3. If the price of electricity in your home changed by 25%, how likely would you be to change your electricity usage?

Ask several students to share their responses and explain why their reaction in some cases might be more pronounced than in other cases. Explain that although almost all goods and services follow the Law of Demand – meaning that an increase in price causes a decrease in quantity demanded – consumer responsiveness differs for different goods. In other words, you might buy a lot more Nikes if the price drops, but you might not change your electricity consumption by as much. Economists call this sensitivity of quantities demanded to price changes “price elasticity of demand.”


Move to the next slide which reviews the law of demand, elasticity, elasticity in the demand curve, and elasticity coefficients. Review slides 3 to 7. Use the Speaking Notes for PPT in the slide deck to guide your students through the discussion.

Group Activity

Show Slide 8. Assign students to work in a small group of 2-3 for this activity. Each group’s task is to review the table of price elasticity of demand at the Mackinac Center for Public Policy: Price Elasticity of Demand and answer the questions in Comparing Gasoline and Restaurant Meals. Give students ample time to complete the activity. Ask students to share their responses to Question 9 and discuss as a class.



Have students complete the Price Elasticity assessment related to Mackinac Center for Public Policy. Use the Price Elasticity Answer Key to review the answers.


Activity 1

Distribute Extension Activity 1 to students. Have students complete the questions. Review the answers as a class using Extension Activity 1 Answer Key.

Activity 2


Have students read the article by Bureau of Labor Statistics called Using Gasoline Data to Explain Inelasticity. Assign each student to write a one-paragraph response to the following question: Why don’t Americans significantly reduce their gasoline consumption when prices at the pump rise?