1. AGED 570: Teaching H.S. Agricultural Economics
Day 7: Teaching Farm and Agribusiness Concepts Part 2

2. Todays agenda Terms Share Pair Muddiest Concept
Elasticity Activity 1: Motivating Elasticity
Elasticity Activity 2: Understanding Demand Elasticity
Elasticity Activity 3: Synthesizing the Idea of Elasticity of Demand
Terms for Tomorrow

3. Terms Share Pair Elasticity Own-Price Elasticity of Demand
Own-Price Elasticity of Supply
Cross-Price Elasticity of Demand
Cross-Price Elasticity of Supply
Elasticity of Demand
Inelastic
Unitary Elastic
Elastic

4. Muddiest Point and Terms Discussion

5. Elasticity Activity 1: Motivating Elasticity
Objective: To understand the need for elasticity
Write down the general definition of slope when you have Y on the vertical axis and X for your horizontal axis
What does slope tell us about Y and X?
We have seen slope before in our previous economic classes, what were they?
Discuss this with a partner.

6. Elasticity Activity 1: Motivating Elasticity
Write down the general definition of elasticity utilizing that Y is on the vertical axis and X is on the horizontal axis
How is elasticity similar to the idea of slope and how is it different?
Discuss this with your partner
Case 1: Suppose 10 individuals could move 10 tons of hay and 12 individuals could move 18 tons of hay in the same time period, what is the slope of hay (Y) to individuals (X)?
What is this telling us?

7. Elasticity Activity 1: Motivating Elasticity
Case 2: Now, suppose 10 individuals could move 20,000 pounds of hay and 12 individuals could move 36,000 pounds of hay in the same time period, what is the slope of hay (Y) to individuals (X)?
How are these problems similar or different?
Discuss with a partner?
Now calculate the elasticity for each case. What did you find?
What does the idea of elasticity do for us?

8. Activity 2: Understanding Demand Elasticity
Objective: To calculate own-price elasticity of demand from a given demand curve, understand its effect on revenue, and be able to segment the demand curve into elastic, unitary elastic, and inelastic
Students will get into two groups
Group 1 will need to create a table that demonstrates the price and quantity demanded relationship for P = 12 – Q, where P represents the price of the good and Q represents the quantity demanded of the good
Be sure to calculate each whole number price that is possible

9. Activity 2: Understanding Demand Elasticity
Group 2 will need to create a table that demonstrates the price and quantity demanded relationship for P = 12 – 2Q, where P represents the price of the good and Q represents the quantity demanded of the good
Be sure to calculate each whole number price that is possible
Next, each group will calculate the elasticity for each price quantity relationship
Does one of the elasticities you calculated not make sense?
Next, each group will calculate the revenue for each price quantity relationship
Next, each group will draw their respective demand curve

10. Activity 2: Understanding Demand Elasticity
Finally, each group will segment their demand curve into the elastic portion, the elastic portion, and the inelastic portion

11. Activity 2: Understanding Demand Elasticity
Thought Questions
Is elasticity constant or changing on a linear demand curve?
How does slope of the demand curve impact the elasticity?
How is elasticity related to revenue?
Why is elasticity of demand of interest to a producer?

12. Elasticity Activity 3: Synthesizing the idea of elasticity of demand
Answer the following questions on your own based on the handout given:
What does the elasticity of coffee mean?
Why do you think the own-price elasticity of demand for gasoline in the short-run is greater than the own-price elasticity of demand for gasoline in the long-run?
Choose one of the items on the list and compare its reported elasticity with your own elasticity for the item, why might these be different?

13. Elasticity Activity 3: Synthesizing the idea of elasticity of demand
For your chosen item, are you more elastic, the same elasticity, or less elastic than the reported value?
Why do you think most of the long-run elasticity estimates are more elastic than the short-run elasticity estimates?
Do automobiles seem like an anomaly when you examine the short-run and long-run elasticities?
Why is elasticity of demand an important concept to understand?

14. Come up with a definition for income elasticity of demand
Once you have developed your definition, compare with a partner whether you came up with the same definition

15. What kind of examples could you use in your classroom to help students with these concepts?

16. Terms to know for Next Class
Equilibrium Price
Equilibrium Quantity
Market Shortage
Market Surplus
Supply and Demand Analysis