Lesson Plan

• Describe the key assumptions underlying elasticity measures and why they may not hold in real markets.
• Analyse the specific limitations of PED, XED, YED and PES.
• Evaluate how these limitations affect managerial decision‑making and propose ways to mitigate them.
• Apply a short‑run versus long‑run perspective when interpreting elasticity data.

• Projector and screen
• Digital slide deck on elasticity limitations
• Printed handout with elasticity tables and case study
• Calculators (or spreadsheet access)
• Worksheet for group analysis
• Sticky notes for segment brainstorming

Begin with a recent headline about a major retailer raising prices and the mixed consumer reaction. Ask students to recall how they would use price elasticity of demand to predict the outcome, linking to prior knowledge. Explain that today they will discover why relying solely on elasticity can be misleading and what criteria they must meet to use it responsibly.

1. Do‑now (5'): Quick calculation of PED using the $10→$12 example; students submit answer on sticky notes.
2. Mini‑lecture (10'): Review of the four elasticity types and introduce the ceteris paribus and time‑period assumptions.
3. Group analysis (15'): In tables, students examine the provided limitation matrix (PED, XED, YED, PES) and discuss real‑world implications for managers.
4. Mitigation strategies (10'): Whole‑class brainstorm of ways to overcome each limitation; record ideas on the board.
5. Application activity (15'): Teams work on a short case study, selecting appropriate elasticity estimates and justifying adjustments for data quality, segmentation, and time horizon.
6. Check for understanding (5'): Exit ticket – one sentence summarising the most critical limitation for the elasticity type they used.

Recap the five‑point checklist for using elasticity responsibly and highlight how each step addresses a specific limitation. Collect exit tickets to gauge understanding, and assign homework: students must locate a recent news article involving a price change and write a brief paragraph evaluating the decision using at least two elasticity considerations.