Elasticity Sniper

Goods fall towards three bins at the bottom of the screen. Each card shows what happened in its market, for example Petrol · price +10% · quantity demanded −3%. Work out its elasticity and shoot it into the right bin with 1 2 3 (or ← ↓ →), or tap the bins under the game. The shot always goes to the lowest card, the one in the sights. The bins are always in order: the smallest coefficient on the left.

• Core: price elasticity of demand (PED) and of supply (PES). Each hit scores 10.
• Advanced: waves of PED and PES, then income elasticity (YED), cross elasticity (XED) and a revenue raid, in turn. The bins change between waves. YED and XED hits score 15, revenue raids 20.

A good in the wrong bin, or one that reaches the bins, costs a life: you start with 5, and the message shows the working. Every four right in a row raise your multiplier (up to ×5); a wave with no lives lost earns a bonus. Each wave is faster than the last, and from the third the numbers are less round.

Price elasticity of demand (PED)

PED = % change in quantity demanded ÷ % change in price. Price and quantity demanded move in opposite directions, so PED is negative; judge it on its size (its absolute value, |PED|). Petrol: −3% ÷ +10% = −0.3.

• Inelastic (|PED| < 1): quantity changes by a smaller percentage than the price. Necessities, goods with few substitutes, and goods that are a small part of income: petrol, cigarettes, bread, salt, electricity.
• Unit elastic (|PED| = 1): quantity changes by the same percentage as the price.
• Elastic (|PED| > 1): quantity changes by a larger percentage. Luxuries and goods with close substitutes: restaurant meals, overseas holidays, one brand of cereal, the petrol at one service station.

Price elasticity of supply (PES)

PES = % change in quantity supplied ÷ % change in price. Price and quantity supplied move together, so PES is positive. Below 1 is inelastic (kiwifruit this season, Auckland houses this year: supply can't grow quickly), exactly 1 is unit elastic, above 1 is elastic (factory-made goods such as T-shirts and plastic bottles, where output can be raised quickly).

Income elasticity of demand (YED)

YED = % change in quantity demanded ÷ % change in income. The sign matters. Below 0: an inferior good, bought less as incomes rise (bus travel, instant noodles). Between 0 and 1: a normal good that is a necessity (milk, toothpaste). Above 1: a normal good that is a luxury (overseas holidays, jewellery).

Cross elasticity of demand (XED)

XED = % change in quantity demanded of good A ÷ % change in the price of good B. The sign matters. Above 0: substitutes (coffee dearer, so more tea). Below 0: complements (petrol dearer, so fewer cars). 0: unrelated.

Revenue raids

Total revenue is price × quantity. When demand is inelastic, raising the price raises total revenue (quantity falls by a smaller percentage). When it's elastic, cutting the price raises it (quantity rises by a larger percentage). When it's unit elastic, neither: total revenue stays the same.

Objective: calculate price, income and cross elasticities from percentage changes, interpret the value and sign of each coefficient, and use PED to predict how a price change affects total revenue.