Assess students' understanding of price elasticity of demand and its implications for firm pricing strategies and tax incidence. Scope includes defining elasticity and its determinants, calculating elasticities from data, analyzing how elasticity affects optimal markups, price discrimination, and firms' responses to cost changes, determining statutory versus economic incidence of per-unit and ad valorem taxes given different elasticities, and evaluating effects on equilibrium quantity, prices, revenues, consumer/producer surplus, and deadweight loss using both qualitative reasoning and numerical/graphical problems.