Episode 16: Elasticity of Demand

We know that consumers will react to price changes, but how MUCH will they react? Knowing this is important to business owners and policymakers.

Category:

Education

Tags:

• economics
• elasticity
• demand

[SuperBlaze999]

should lower the price ,- is this correct

[mjmfoodie]

@SuperBlaze999 yes, indeed.

[LavaEagle]

You should think about teaming up with Khan Academy.

[mjmfoodie]

@LavaEagle Maybe KhanAcademy should think about teaming up with me . . .? ;-)

[mjmfoodie]

I recommend that she lower her prices (give a discount) not because I have an exact number, but because I can make an educated guess that her product - children's books at her store - will have an elastic demand (not a necessity to purchase the books, lots of alternative places to acquire books). I'm planning to add one more elasticity video, that addresses characteristics that allow you to predict whether demand will be elastic or inelastic.

[1977sjn]

I am an Economics teacher in Dubai, UAE. I would highly recommend this video not just for students but for teachers as well.!!! "You can never stop learning" and I just did after I viewed the video. Good work!!

[heavym3tal]

I understand that your friend wants to increase profits, but shouldn't she chart a regular supply and demand curve for the various books she sells. I.E- if more customers are buying children's books, demand increases, and therefore price increases.

Thank you for the explanation in price elasticity. And I know that this model is a simplistic one for presentation's sake, but what real world example follows this? I ask because the smoking example is one to institute public policy.

[ashes388]

@LethalPierogi well think from the firm's point...if it does tt then it's customer will shift to a substitute lol ok it wont affect me too either haha

[Mappostolova]

this is so so so helpful

[anttrap321]

one thing i dont understand my textbook introduced the percentage change formula to calcuate price elasticity. but it is rarely used. instead every single question i encounter required the use of the midpoint formula which was barely mentioned in the text. so what is the percentage formula for? when do i use it. thx

[NelsonNellyTeddy]

Actually there is a question I wanna raise. A 10% increase in price should not be leading to a 10% decrease in Qd, 110% x 90% = 99% only, and 1 % of the the total revenue is missing.

[Zannamas]

Thank you for all your effort. I won't let you down! XD

[seadragon36]

I appreciate the concrete examples from the news, the anti-teen smoking price increase and the NY milk price floor in Episode 15 -- it's helpful to see the complexity and unintended consequences of implementing these theories. Thanks for these great videos!

[LethalPierogi]

@valverj oh the percent.... tru

[valverj]

@LethalPierogi a 1 dollar increase over an the already set price of one dollar is a big deal its 100% increase not the actual amount, the %.