ILO:
a) Understanding of price, income and cross elasticities of demand
b) Use formulae to calculate price, income and cross elasticities of demand
c) Interpret numerical values of:
o price elasticity of demand: unitary elastic, perfectly and relatively elastic, and perfectly and relatively inelastic
o income elasticity of demand: inferior, normal and luxury goods; relatively elastic and relatively inelastic
o cross elasticity of demand: substitutes, complementary and unrelated goods
d) The factors influencing elasticities of demand
e) The significance of elasticities of demand to firms and government in terms of:
o the imposition of indirect taxes and subsidies
o changes in real income
o changes in the prices of substitute and complementary goods
f) The relationship between price elasticity of demand and total revenue (including calculation)
a) Understanding of price, income and cross elasticities of demand
b) Use formulae to calculate price, income and cross elasticities of demand
c) Interpret numerical values of:
o price elasticity of demand: unitary elastic, perfectly and relatively elastic, and perfectly and relatively inelastic
o income elasticity of demand: inferior, normal and luxury goods; relatively elastic and relatively inelastic
o cross elasticity of demand: substitutes, complementary and unrelated goods
d) The factors influencing elasticities of demand
e) The significance of elasticities of demand to firms and government in terms of:
o the imposition of indirect taxes and subsidies
o changes in real income
o changes in the prices of substitute and complementary goods
f) The relationship between price elasticity of demand and total revenue (including calculation)
Starter
Why is understanding the relationship between price and demand important?
What implications would you expect from the following price changes?
What implications would you expect from the following price changes?
http://www.dailymail.co.uk/news/article5460861/Freddochocolatebarsbiggestpricehike2000.html
Definitions
Price elasticity of demand (PED) measures the responsiveness of quantity demanded to a change in price.
Income elasticity of demand (YED) measures the responsiveness of quantity demanded to a change in income.
Cross (price) elasticity of demand (XED) measures the responsiveness of quantity demanded for one good to a change in the price of another good.
Income elasticity of demand (YED) measures the responsiveness of quantity demanded to a change in income.
Cross (price) elasticity of demand (XED) measures the responsiveness of quantity demanded for one good to a change in the price of another good.
Importance PED for Firm & Government
Consider the information in the following two extracts. Why would elasticity be relevant to either economic agent?
YED
What do you think the definition and formula are?
What do the numbers mean?
Why is it important for firms and Government to know?
What do the numbers mean?
Why is it important for firms and Government to know?

Appetite in China grows for luxury fashion brands
Additional reading:
Why do the Chinese love Bicester Village? 
XED
What do you think the definition and formula are?
What do the numbers mean?
Why is it important for firms and Government to know?
What do the numbers mean?
Why is it important for firms and Government to know?
How is Walmart Making Money by Pricing Below Cost?

Sony has confirmed that the PS4 will be sold at a loss at launch, but day one game sales and PlayStation Plus subscriptions will turn a profit. The Japanese electronics manufacturer is relying on launch title sales and PS Plus subscriptions to recoup the money lost by sales of the PS4 hardware.20 Sep 2013
https://www.trustedreviews.com/news/ps4tobesoldatalossbutlaunchdayrecoupexpectedfrompsplussubsandlaunchtitles2905846 
Revision
Price Elasticity of Demand

Income Elasticity of Demand

Cross Price Elasticity of Demand
