Calculating the Elasticity of Demand
Elasticity of demand is equal to the percentage change of quantity demanded divided by percentage change in price. In this video, we go over specific terminology
Elasticity of demand is equal to the percentage change of quantity demanded divided by percentage change in price. In this video, we go over specific terminology and notation, including how to use the midpoint formula. We apply elasticity of demand to the war on drugs, and more broadly to the prohibition of a good when it has an elastic demand.
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I very impressed with the style and content of your videos- please can you tell me when the additional videos on principles microeconomics will be realeased.
Hi there. I got the answers wrong to the questions about whether I would want the demand to be elastic or inelastic if I want to pay the lowest possible rent in a scenario where there is an increase in the amount of housing near a university, and where there is a decrease in the amount of housing near the university. Is there an explanation of the correct answer anywhere?
If you live in a college town and supply is about to increase, you want demand to be *inelastic*. If demand is elastic then all the units will fill even if prices stay high.
Then for the opposite, supply is about to decrease so you want demand to be elastic. That means renters will be able to find alternatives and the landlords will have to lower their prices to fill the housing that remains.
In the United States, the long-run elasticity of oil demand has been estimated at -0.5. Some policymakers and environmental scientists would like to see the United States cut back on its use of oil in the long run. We can use this elasticity estimate to get a rough measure of how high the price of oil would have to permanently rise in order to get people to make big cuts in oil consumption. How much would the price of oil have to permanently rise in order to cut oil consumption by 50%?
A. d. 100%
i dont agree with this Quiz answer. i think it should be 25% … can you please explain how you got the 100% ? thanks… i love what you are doing by the way :)
For the formula at 2:52, isn't it better to specify that it applies when mid-point calculation is used? With base point calculation, the results could be different. For example, with the graph at 10:47, one number will be <1 and the other >1 when you change the direction of the calculation.