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ECO 101 · Unit 2 of 6

Elasticity and Market Response

Microeconomics and Competitive Markets

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Learning objectives

After completing this unit, you will be able to:

  • to business decisions
  • Apply the frameworks in "Elasticity and Market Response" to a real management decision
  • Make progress on your Microeconomics and Competitive Markets case analysis applied project

Why this matters

Elasticity and Market Response is essential to Microeconomics and Competitive Markets. Lessons build fluency with anchor-company examples, worked problems, and assessments on the unit page.

Lesson

Unit overview

Complete all 5 lessons in order. Each lesson follows the program authoring standard: conceptual prose, worked examples, practice problems, and managerial judgment prompts. Finish unit exercises and the knowledge check before marking the unit complete.

Connection to applied work

This unit feeds directly into Microeconomics and Competitive Markets case analysis. As you read, capture notes, examples, and data you can reuse in that deliverable. Strong students finish each unit with a draft section of their project, not just highlights.

Practice

  1. Write a one-page summary of this unit in your own words without looking at the lesson.
  2. Find a real company example (public filing, news article, or personal experience) that illustrates the main concept.
  3. Draft one paragraph recommending an action a manager should take based on this unit.
  4. Add at least three terms from this unit to your course glossary.

Knowledge check

Answer these without notes before marking the unit complete:

  1. What is the central idea of "Elasticity and Market Response"?
  2. What mistake do beginners most often make when applying this material?
  3. How does this unit help you complete Microeconomics and Competitive Markets case analysis?
  4. What is one decision you face this month where this unit applies?

Key takeaways

  • to business decisions
  • Business concepts only matter when they change a decision.
  • Your ECO 101 assessment (Demand, supply, elasticity, market structure, and strategic microeconomic reasoning.) rewards applied understanding, not memorization.

Unit assessment

Complete each section below. Score 80%+ on the quiz to finish this unit's assessment.

40% applied project35% knowledge checks25% reflections

Exercises

Apply what you learned in this unit with structured practice.

ExerciseApplied practice: Elasticity and Market Response45 min
Complete a focused practice exercise on **Elasticity and Market Response**. 1. Choose a real company, product, or situation you know. 2. Apply one core framework from this unit to analyze it. 3. Write your analysis in 300–500 words with a clear recommendation. 4. Cite at least one credible source.

Deliverable

300–500 word analysis document saved to your portfolio under ECO 101.

Rubric

  • • Framework applied correctly (not just named)
  • • Specific evidence from a real example
  • • Clear recommendation with tradeoffs acknowledged
  • • Professional writing with source citation
ExerciseDrill: Elasticity and Market Response30 min
Work through the practice problems in the unit lesson without looking at notes. Then check your work against the lesson and write a short reflection: - What you got right - One mistake you caught - One concept to review before the next unit

Deliverable

Problem solutions + 150-word reflection in your ECO 101 workbook.

Rubric

  • • Attempted all practice items before checking answers
  • • Honest reflection on errors
  • • Identifies a specific review action

Case analysis

Analyze a case using frameworks from this unit.

CaseCase analysis: Elasticity and Market Response60 min
Analyze a real business case through the lens of **Elasticity and Market Response**. Choose a public company event, HBR-style case, or documented decision. **Deliverable structure:** 1. Situation summary (150 words) 2. Analysis using this unit's frameworks (400 words) 3. Recommendation (150 words) 4. Risks and what would change your mind

Deliverable

2-page case write-up in your portfolio.

Rubric

  • • Case facts are accurate and sourced
  • • Analysis uses unit frameworks explicitly
  • • Recommendation is justified with tradeoffs
  • • Risks are specific, not generic

Knowledge quiz

Check your understanding before marking the unit complete.

1. ClearPeak's short-run residential price elasticity estimate is −0.35. A 4% average rate increase is filed. Approximate percent change in energy sales, holding other factors constant?

2. Federal rooftop solar tax credits expand and installer leases undercut ClearPeak's afternoon energy sales. Which elasticity concept should Amara model first?

3. Commercial elasticity at ClearPeak is −0.55 versus residential −0.35. A uniform 3% rate rise is proposed. Which segment faces larger predicted quantity loss?

4. After a 2024 time-of-use pilot, control peak kWh fell 2.1% while pilot fell 6.8% with +18% peak price. Difference-in-differences peak reduction is 4.7%. What short-run pricing lesson follows?

5. Elena notes |elasticity| < 1 for residential energy short run. ClearPeak considers a rate increase to recover gas peaker costs. Predicted effect on total energy revenue?

6. A recession reduces commercial sales 6% while rates are unchanged. Which estimate should Tom Bradley refresh before the filing?

7. ClearPeak Practice Problem uses $40M annual scale with a 6% driver change tied to elasticity. Base driver impact in the solution is approximately:

8. A manager claims 'elasticity −0.35 means a 35% price cut doubles sales.' What misconception is this?

Next unit: Consumer and Firm Decisions →