EJC_H2Econs_Topic3

1 © Eunoia Junior College Economics Department 2025 Topic 3: Elasticities of Demand & Supply Theme 2.1 Price Mechanism and its Applications How to use this set of lecture notes? 1) BEFORE LECTURES – UNDERSTANDING CONTENT - Reference your notes against your H2 syllabus. Mark out the key concepts so that you know what you MUST know - Read your notes ahead so that you can focus on listening and capturing additional notes during lectures 2) During lectures – APPLYING CONTENT - Bring your hard copy notes along, and use your PLDs to refer to the lecture slides concurrently - Capture additional notes, especially the real-world examples where you can note down how concepts are applied and how economic analysis are developed in varying contexts - You should make use of a notetaking/consolidation tool to take notes during lessons and to consolidate your learning at timely junctures. Examples are MIRO, Notion, Goodnotes, Notability, Microsoft OneNote, KAMI, etc. The choice is yours! 3) After Lectures – TUTORIAL PREPARATION to use content flexibly to show application, analysis and evaluation skills - Revise concepts relevant for the case study and essay questions - Refer to the notes and use it flexibly to prepare your answers to meet question requirements. Pure memorisation will not work as it does not involve deep understanding. - Do share your notes with your friends to multiply learning!

2 © Eunoia Junior College Economics Department 2025 CONTENTS Introduction to Elasticities of Demand and Supply 1. Elasticity 1.1. Concept of elasticity 2. Price Elasticity of Demand (PED) 2.1. Definition 2.2. Measurement and Formula 2.3. Interpretation of sign and coefficient of PED 2.4. Determinants of PED 2.5. Application of PED to analyse market outcomes and impact on economic agents 3. Income Elasticity of Demand (YED) 3.1. Definition 3.2. Measurement and Formula 3.3. Interpretation of sign and coefficient of YED 3.4. Graphical illustration of YED 3.5. Determinants of YED 3.6. Application of YED to analyse market outcomes and impact on economic agents 4. Cross Elasticity of Demand (XED) 4.1. Definition 4.2. Measurement and Formula 4.3. Interpretation of sign and coefficient of XED 4.4. Application of XED to analyse market outcomes and impact on economic agents 5. Price Elasticity of Supply (PES) 5.1. Definition 5.2. Measurement and Formula 5.3. Interpretation of sign and coefficient of PES 5.4. Determinants of PES 5.5. Application of PES to analyse market outcomes and impact on economic agents 6. Limitations of Elasticities Concepts Summary on the Use of Elasticities Concepts Annex Essential Questions: 1. Changes in demand and supply can affect equilibrium price and quantity, consumer expenditure, producer revenue, consumer surplus and producer surplus. How are these outcomes affected by elasticities concepts? 2. How do economic agents make use of elasticities c