Introduction to price elasticity of demand | APⓇ Microeconomics | Khan Academy
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- Опубликовано: 24 ноя 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 have been trying to figure out elasticity of demand for 2 days and I FINALLY understood it with your video! Thank you!
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
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 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 🎉
5:10
Price *ElasTiTi*
😂
Thank you for getting me through college, Mr. Khan 😅
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?
I have a test in 30 minutes, wish me luck 🙏
thnx for the videos sal.....love from INDIA
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🙏🙏👌👌👍👍👍👍👏👏👏
Thanks for your help, now i can be able to understand.❤
Thank you so much, sir. Now, I understand this method .
So helpful! Thank you for this.
I have a test tomorrow
I really hope I get this
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?
thank you so much it helped alot
Thanks , that’s a great comparative explanation!
Alphabet needs this class
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 ?
why we did not divide by the average as in the first videos ?? Thanks
Hi, why do the negative numbers get written as positive numbers? and is that a general rule, as in can you never have a negative elasticity of demand?
LOOV YOU TO THE MOON AND BACK ❤️❤️❤️❤️❤️❤️
Thank you for that good work delivered to me
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?
thank you
Great video here
It is interesting! Thank you !
great explanation🙃
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
thank you so much
Thank you!
very helpful
i have midterm examination in 2hours, manifesting to pass in exam🙏
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
Have a test currently. Im struggling :(
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
thank you sir!
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
Who has test of economics ?
I hve a test in 2 hours 32 minutes😊
nice vibes much love
how does this guy teach everything
I have a quiz tomorrow and this calculation is confusing me 😭
Me too
I need to know who voices this ASAP
I still don't understand 💔
I can tutor you
Isn't -9 inelastic?
Sign doesn't tell about the magnitude of elasticity, it just tells the direction of change. - means price and quantity move in opposite directions (law of demand)
DOUBLE CHECK
he writes neater in computer than i do in my note😂
Driving of elasticity
My micro class requires using the midpoint method. So this method is in fact not sufficient.
Exactly!
Thank
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?
What method is this known as?
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’m still confused on how he got -.25. Can someone explain?
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.
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
Before goin to z exams ✌🏻
Thank u sir 👍👍👍🇳🇦
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
Is -9 not less than 1?
please how do i apply this knowledge to geophysic(seismic method)
Bro elasticity is different concept in geophysics. This is about economy.
i dont get why he puts the fractions that way
Me trying to understand before my exams which are 2 days away😅
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
lol i have a test tomorrow and didnt pay attention in class send help
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 the cross elasticity of demand
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
What about if from point A to point E
Same question
i have a quiz in 20 minutes xd
i have one in an hour lololol
@@YoshiAirhead what happened ????? update me man
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
I have an ECON 331 exam at 3 😭
I love you❤
I have test in 10 mins
I am writing in 30mims
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
Got a test tmr lmao
Thanks. Am sinking now hha
I’ve got a test in 20 minutes lmaooo
Hi sal khan
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!
I have an exam at 1:30
dawg i just want to go to uconn for social work why do i have to take this fuckass class
There has to be an easier way! 🤦🏾♀️🤦🏾
That hurts
my final exam is in 31 minutes 😭
Good luck, I have an assignment due 11:59😭
Test in 3 hours
Eco freak