Lesson Plan

• Define cross elasticity of demand and interpret its sign.
• Identify and explain the key factors that influence the magnitude of cross elasticity.
• Analyse how time horizon, availability of alternatives, and market definition affect XED.
• Apply the factors to real‑world examples to predict cross‑price responses.
• Evaluate the impact of brand loyalty and expenditure share on cross elasticity.

• Projector and screen
• Whiteboard and markers
• Printed handout of the factor summary table
• Calculator for each pair of students
• Interactive polling tool (e.g., Kahoot) for quick checks
• Scenario cards showing price changes for paired goods

Begin with a short video clip showing two competing brands adjusting prices and ask, “What do you think happens to the demand for the other brand?” Connect this to students’ prior knowledge of price elasticity, then outline that today they will explore why the cross‑price response varies.

1. Do‑now (5'): Students answer a rapid‑fire question on whether tea and coffee are substitutes or complements.
2. Mini‑lecture (10'): Review definition of XED and sign interpretation, using the whiteboard diagram.
3. Factor exploration (15'): In pairs, students receive a scenario card and use the handout to identify which factors are driving the expected XED; they record their reasoning.
4. Whole‑class debrief (10'): Groups share findings; teacher highlights the seven factors and adds real‑world examples.
5. Interactive poll (5'): Quick Kahoot quiz to check understanding of each factor’s effect on |XED|.
6. Application activity (10'): Students calculate a sample XED using provided percentage changes and discuss how the identified factors would modify the result.
7. Formative check (5'): Exit ticket – one sentence stating the most important factor for a given pair of goods.

Summarise the seven determinants of cross elasticity and emphasise how they shape both the sign and magnitude of XED. Collect the exit tickets as a retrieval practice and assign homework: students must choose two related products, research recent price changes, and write a brief analysis of the expected cross‑elasticity using the factors discussed.