Lesson Plan

• Describe what a substitute good is and how cross‑price elasticity indicates substitutability.
• Calculate the percentage change in quantity demanded of a good using the cross‑price elasticity formula.
• Analyse how a price change in one market shifts the demand curve of its substitute and alters equilibrium price and quantity.
• Evaluate real‑world examples of substitute relationships, such as gasoline versus public transport.

• Projector and screen
• Whiteboard and markers
• Printed worksheet with cross‑price elasticity problems
• Graph paper and rulers
• Calculators
• Sample data table of substitute goods (e.g., butter/margarine, tea/coffee)

Begin with the question, “What would you buy if the price of coffee suddenly doubled?” This hooks students and links to their everyday experience. Review prior knowledge of own‑price elasticity and how price changes affect demand for the same good. Explain that today’s success criteria are to calculate cross‑price elasticity and predict how such price shifts move the demand curve of a substitute.

1. Do‑now (5') – Quick quiz on own‑price elasticity concepts.
2. Mini‑lecture (10') – Define substitute goods, introduce cross‑price elasticity, present the formula \(E_{xy}= \frac{\%\Delta Q_x}{\%\Delta P_y}\).
3. Guided practice (10') – Work through the tea‑coffee example, calculate the 4 % increase in coffee demand.
4. Graphing activity (10') – In pairs, sketch the demand curve for butter shifting right when margarine’s price rises; annotate the shift magnitude.
5. Real‑world case discussion (10') – Analyse the gasoline price shock scenario and its impact on public transport and electric‑car markets.
6. Check for understanding (5') – Exit ticket: write one sentence predicting the market effect of a price rise in a given substitute.

Summarise that positive cross‑price elasticity signals substitutability and that price changes cause demand shifts in related markets, moving both equilibrium price and quantity. Collect exit tickets to gauge understanding, and assign homework: complete a worksheet with two new cross‑price elasticity calculations and brief explanations of the resulting market impacts.