A-Level Business: Price Elasticity and the Cinema Pricing Decision

Students calculate price elasticity of demand for cinema tickets and a snack combo, link it to revenue and contribution, and judge a manager's plan to cut one price and raise the other.

What students do

• Calculate price elasticity of demand for cinema tickets from a one-week price test and say whether demand is elastic or inelastic
• Do the same for a snack combo with a price rise, and explain what happens to revenue in each case
• Complete a table of revenue and contribution before and after, and explain why revenue and contribution rise by different amounts
• Give two reasons the combo is less elastic than tickets, then evaluate the manager's plan and name a reason each estimate may be unreliable

What the teacher gets

• A lesson plan for about 55 minutes of tasks, with a shorter 45-minute version. Allow longer in the timetable for handing out and feedback
• Worked answers for every question and a note on the assumptions behind the figures
• Indicative guidance for the written answer. It is not an exam board mark scheme and carries no marks or grades
• Editable Word versions of both files, so you can change the business or the figures

Specification

Edexcel A level Business 9BS0, Theme 1 (Marketing and people), section 1.2.4 Price elasticity of demand, with contribution from Theme 2, section 2.2.3(a). Checked against the Pearson specification, Issue 1, September 2014. The cinema and every figure are fictional and the questions are original. This is not a Pearson resource, and the lesson has not yet been tested in a classroom.