Introduction to price elasticity of demand | APⓇ Microeconomics | Khan Academy
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- Опубликовано: 27 авг 2024
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Economists use the concept of price elasticity of demand to describe how the quantity demanded changes in response to a price change. In this video, explore a simple way to calculate the price elasticity of demand, how to interpret that calculation, and how price elasticity of demand varies along a demand curve.
AP(R) Microeconomics on Khan Academy: Microeconomics is the study of individual decisionmakers in an economy, such as people, households, and firms. Learn how markets work, how incentives drive decisionmaking, and how market structure influences market outcomes. We hit the traditional topics from an AP Microeconomics course, including basic economic concepts, markets, production and costs, profit maximization perfect competition, imperfectly competitive market structures, game theory, factor markets, and income inequality.
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I have a test in a hour and thirty minutes 😂
me too haha
Wess - how’d yours go i got a 98
@@braydenmoore43 i probably got like a B+ or something I don't remember 😂
Same
How was it?
I SPENT HOURS OF WATCHING THIS VIDEO.. I FINALLY UNDERSTAND NOW HOW TO CALCULATE IT..
EXPLAIN PLEASE
I’m struggling with converting the fraction into a percentage. 🙄 I’m going to have to watch another video to figure that out and come back. 😂
@@h.s.3883 just multiply them by 100
BUT it seems wrong
should be difference in qty out of sum of the two qty
I was spending the past few days being stressed and frustrated about this topic and 2mins into this video I already got it haha!!!
ong ong ong ong ong 🎉
Thank you sir. I have been struggling to understand this for hours. Finally i understood it. ♥
Thank you, I could not actually understand when i saw my universiuty lesson video, but now i learnt it in 9 minutes, Thank you very much to Khan Academy team,
Price elasticity of demand is very good to know for business owners.
I have been trying to figure out elasticity of demand for 2 days and I FINALLY understood it with your video! Thank you!
I have a test in 30 minutes, wish me luck 🙏
Thank you for getting me through college, Mr. Khan 😅
thnx for the videos sal.....love from INDIA
Why aren't you using the equation ((Q2-Q1)/(Q2+Q1)/2)/((P2-P1)/(P2+P1)/2). My professor and all other videos use this equation, and when you use it you get a different result.
i think thats the midpoint technique
That is the equation for the arc price elasticity of demand
How do you decide which formula to use?
@@estherkang4593 As far as I know, the midpoint technique is more frequently used. In the technique, what the video shows, it does matter if you count elasticity AB or BA (in this case you get 4). You will not get the same results.
With the midpoint technique, it does not matter if you count AB or BA, you will get the same result. It is like an "average" elasticity.
Yes why?
Hi, Interesting you're considering a rate as a quantity.
How does adding a time dimension ripple through other aspects including how the demand curve intersects with the supply curve, time value of the product?
Also curious as to whether a demand curve's independent variable really is the quantity, rather than the price, since from the consumer's perspective, the quantity isn't usually the given. Typically a price is given, and then the consumer decides how much they want at that price.....sort of expressed as Q = f(P). Because we are typically in the position of having to derive a demand curve, using probability distributions of demand-side characteristics (i.e. demand destruction), and those probability distributions usually relate to the independent variable in a function, how should we normalize such relationships?
5:10
Price *ElasTiTi*
😂
Your explainations are literally the best have great life khan academy teachers u r doing a great job love your videos sooooonmuch very good concept explanation🙏🙏👌👌👍👍👍👍👏👏👏
So helpful! Thank you for this.
Thank you so much, sir. Now, I understand this method .
Thanks for your help, now i can be able to understand.❤
LOOV YOU TO THE MOON AND BACK ❤️❤️❤️❤️❤️❤️
Thanks , that’s a great comparative explanation!
I have a test tomorrow
I really hope I get this
Thank you for that good work delivered to me
thank you
great explanation🙃
Isn't -9 inelastic?
It is interesting! Thank you !
thank you so much
Alphabet needs this class
why we did not divide by the average as in the first videos ?? Thanks
very helpful
Test on monday, ill let yall know how i did
how did you do
Dude tell us....
Tell you bot!!
telll us
NOW I AM INTRIGUED DID HIS TEST LAST A YEAR
Great video here
Thank you!
thank you sir!
In the theory of price is the social and environmental cost is what killing us in long run but rarely people had it in condideration or correctly see it
when we have p1 and p2 but do not have q1 and q2 and just have statement that it increases per kg, then what we should do?
I hve a test in 2 hours 32 minutes😊
I'm wondering then how a market has elastic and inelastic? If we want to decide the market, is this market elastic or inelastic base on the example?
This isn't about a market, this is about consumer demand.
Elasticity of demand is on the consumers.
Elasticity if supply is on the producers.
If it helps, the Elasticity of a market is a hindsight measurement or projection based on history. In this video discussing demand, it's about consumer reactions to market price changes.
For example: cigarettes are addictive, if the price of cigarettes goes up, the consumer of that product will likely be unhappy, but will still but the product and we will see little to no difference in the sales of cigarettes (if the price increase is done in moderation of course). This is called an Inelastic market of demand because of the BUYERS habits.
Opposite of that would be fast food, like McDonald's recently. They got rid of their dollar menu and raised prices to be equal to restaurant prices. When they raised prices, their sales dropped rapidly. The reason? People didn't think the juice was worth the squeeze... they didn't think it was worth it. This big drop in demand makes the fast food market, ELASTIC, because people are more willing to exercise choice in food.
You can be as precise or broad when determining the market you're using, so keep that in mind.
A few things that affect demand Elasticity are:
- number of alternatives (more alternatives means more elastic and vice versa)
- necessity vs luxury (necessities are Inelastic, luxuries are elastic)
- time available for market adaptation (the more time that's available to the buyer before needing to purchase a good, the more elastic it becomes).
Hope this helps
I have a quiz tomorrow and this calculation is confusing me 😭
Me too
nice vibes much love
how does this guy teach everything
Thank
hi from what i understand it is better to find companies with inelastic demand because they have somewhat of pricing power , but what if they run into competition and need to lower prices since their quantity barely affected in relation to price , i wonder if it true to assume the price elasticity can change from inelastic to elastic after this scenerio ?
Who has test of economics ?
i have midterm examination in 2hours, manifesting to pass in exam🙏
he writes neater in computer than i do in my note😂
My micro class requires using the midpoint method. So this method is in fact not sufficient.
Exactly!
DOUBLE CHECK
Thank u sir 👍👍👍🇳🇦
Have a test currently. Im struggling :(
Driving of elasticity
i dont get why he puts the fractions that way
I love you❤
Before goin to z exams ✌🏻
lol i have a test tomorrow and didnt pay attention in class send help
Actually how the value of elasticity change from negative to positive during interpertation?
It's an absolute value equation. Not sure why he didn't add that
What if you were trying to find the elasticity of demand for the entire set of goods
Then you are using a broad market and it's elasticity will be more Inelastic as alternatives and substitutes get absorbed into your theoretical.
The more broad a market, the less elastic (more Inelastic) it becomes
Oooon
I need to know who voices this ASAP
Me trying to understand before my exams which are 2 days away😅
What method is this known as?
The price of elasticity of demand for the following product
Product 1 Price S30 units sold 150 O00 price 2 S 24 units sold 18000
should you have a negative numbers for ED?
No, you use absolute values. So the 'negative' number is turned into a positive. You're looking for the magnitude or change in price rather than trying to find a negative number.
@@famousamos Why do we take an absolute value?!
@@arabicman866 Due to the law of demand, PED is typically negative. So for purpose of analysis, the negative sign is usually ignored and only magnitude is considered.
please how do i apply this knowledge to geophysic(seismic method)
Bro elasticity is different concept in geophysics. This is about economy.
I am confused as to why Price from A to B is -1 and E to F is also - 1? why isn't it just 1?
Would you please Can prove price elasticity of demand is negitive for all negatively slope demand curve?
Demand is always negatively sloped when graphing it. Which direction you are heading is the question. To that, it's just math.
Sorry, I know that might not be very helpful, but it's the way it id
Hi Prof! Is there a possibility of finding a zero elastic answer since 0 > 1? :)
Definitely you can find an Ed of zero, but it cannot be greater than 1 since it is less than after all. So, in terms of its type, it's perfectly inelastic-meaning that no matter the change in price, the demand (dependent variable) remains the same which you'll find is a very rare case.
@@sophia-et2xhcan't it happen with necessitites with no substitution?But actually i guess most good have substitutions,but for instance if we take gas as a good,can it be perfectly inelastic?I think I'm talking nonsense
I have an ECON 331 exam at 3 😭
I am writing in 30mims
What about the cross elasticity of demand
Why do we take an absolute value?!
Everything may in be inelastic cause the negative sign will make the figures less than one. That's why midpoint technique is the best cause you don't need to assume or take absolute value.
@@mbangrene6858 thanks ❤️ I knew that later on 😅 but still thank you
U know what we got here? We got an elastic product. U know what dat mean? Dat mean if people go ELSEwhere and get dey printin and copy'n done...DEY GONNA DO IT!
How is it 1 over 9 were did the 9 come from
What about if from point A to point E
Same question
I have test in 10 mins
It's hard.😫
It depends on what you've been studying.
The first time I tried this, I understood nothing, but stumbled upon it once again when solving the exercises of my Calculus book (at the very beginning, like 'Chapter 2: Limits, Continuity and Derivatives'), and everything made sense
Can anyone plz tell me during covid 19, was the demand for apparel retail products elastic or inelastic?
Elastic.
People weren't needing new clothing and incomes, by and large, didn't allow for much luxury purchases and any price shifts were met with scrutiny during this time.
You also need to know the market for your country as well. This could be different depending on where you're from
i have a quiz in 20 minutes xd
i have one in an hour lololol
@@YoshiAirhead what happened ????? update me man
Thanks. Am sinking now hha
Got a test tmr lmao
dawg i just want to go to uconn for social work why do i have to take this fuckass class
I have an exam at 1:30
Hi sal khan
I’ve got a test in 20 minutes lmaooo
That hurts
Wait, Is it a straight line or not! If it is, your whole calculation is wrong! Its the slope you refer to and that is constant lol. From your diagram, it is a crooked line and I hope it is so!
There has to be an easier way! 🤦🏾♀️🤦🏾
Test in 3 hours
my final exam is in 31 minutes 😭
Good luck, I have an assignment due 11:59😭
Eco freak