Thank you so much for this video. This has been a BIG HELP in my economics class. I’ve tried learning using the book, but it skips over steps as if I should know them already 🙄.
You must have two price/ quantity points on the demand curve to find price elasticity of demand. If you're only given a supply schedule, you would be able to find elasticity of supply, but not demand.
Thanks for watching, glad you were able to use the video. The images are simply in a Powerpoint file, and the drawing is done within Powerpoint with a Wacom drawing tablet.
Powerpoint for the images, with a Wacom drawing tablet for the written component; screen capture video produced with Camtasia. Thanks for watching and your comment!
When in doubt, use the midpoint formula. The basic formula may only be used when you know the beginning and end points (e.g. you know the price of gasoline rose from $1 to $1.50, and the quantity bought dropped from 100,000 to 90,000 gallons). Here you know that % delta Q is -10%, and % delta P is 50%, so your basic elasticity coefficient works out to -10%/50% = -.2 (inelastic as we would expect). But even in this case, the midpoint formula will work just fine and give the appropriate result: % delta Q is (-10k/95k) = -10.5% and % delta P is (.50/1.25) = 40%, so your elasticity coefficient works out to -10.5%/40% = .26 (inelastic--result is not significantly different from the "basic" formula result). Hope this helps! Cheers.
Those are the midpoints between the two quantities (5m and 10m, midpoint or avg. = 7.5m) and the two prices ($0.25 and $0.30, midpoint or avg. = $0.275). When finding the % change you take the difference divided by the midpoint (average). The formula to find this is: (starting value + ending value)/2 e.g. (5m + 10m)/2 = 15m/2 = 7.5m
if a professor always spends 5%of his income for purchasing a book,the absolute value of his own price elasticity of demand for books is 100%do you agree??
You are indeed right! Good catch. One of the deltas should be negative (either price or quantity) because we always have an inverse relationship between price and quantity. Fortunately for me, however, my elasticity result is still good due to the fact that we think about elasticity of demand in absolute value terms.
3) Suppose XYZ Dairy Firm at Sululta is selling flavored milk and Yogurt in packets of 150 ml. The dairy sells 2000 packets of flavored milk and 1000 packets of Yogurt every day. The former is priced at Birr 6 and the latter at Birr 4. A market survey estimates the cross-price elasticity (both ways) to be +1.8, and the own price elasticity of flavored milk to be -1.2. The dairy is contemplating a 10% reduction in the price of flavored milk. Should it go ahead with the price reduction or not? Show your workings
I believe you're talking about the problem at 5:14? In that example, price went up from $200 to $250, which is a change of +$50 divided by a starting point of $200: $50/$200 = .25 or 25%. Likewise, quantity went down from 12 to 8 units, which is a change of -4 divided by a starting point of 12: -4/12 = -.33 or -33%. Hope this answered your question!
I do have one. I am struggling with setting up this scenario to a formula. "As a transit planner, you must predict how many people ride commuter trains and how much revenues are generated from train fares. According to a recent study, the elasticity of demand for commuter-train rides is -0.62. The current ridership is 100,000 people per day. If the transit authority decides to raise its fares by 20%, predict the change in ridership per day."
This is actually pretty simple--let's just think it through. The elasticity coefficient of -0.62 means that the quantity demanded change is -0.62 times the price change. Thus, if price goes up by 1%, quantity purchased will decline by -0.62% (1% X -0.62). If price goes up by 20%, quantity purchased ("ridership" in the mass transit jargon) will decline by: 20% X -0.62 = 12.4%. Given that the elasticity coefficient is less than one in absolute value--indicating a product with "inelastic" demand at this price point--it makes sense intuitively that the quantity change (ridership drop) is proportionately less than the price increase: -12.4% < 20%. In other words, quantity demanded is not very sensitive to changes in price, and price increases will yield increased revenue, because although there are fewer tickets bought, the price increase more than makes up for the decline in ridership. Oh, and applying the -12.4% predicted quantity result of the 20% price increase to the 100,000 riders per day, you'll wind up with: 100,000 X (100% - 12.4%) = (100,000 X 87.6%) = 87,600. Hope this helps--cheers!
Karl, thanks for pointing out that inconsistency--you are correct: it should be 3.72 (rounded down to 3.7). It looks to be simply a rounding error on my part. I'm sorry for any confusion it might have caused!
People who weren't paying attention in class and came here for a one on one, gather for a selfie LMAO
🤣🤣🤣
Cheese😊
Cheese 😁📷✨
🙋♀️🤣
🧍🏼♂️
This video has been a very big help to me. Thank you for breaking it down and providing examples so that I can follow along.
you are welcome--I appreciate the feedback
Astounding explanation you have given here. Really helped me understand what my teacher couldn't. You sire are the MVP!
Thanks for the kind words--very glad I could help!
Thank you so much for this video. This has been a BIG HELP in my economics class. I’ve tried learning using the book, but it skips over steps as if I should know them already 🙄.
I had no option but to subscribe and comment an appreciation. Thanks a million for such an excellent teaching. God bless!
Thank you , this was very clear and helpful.
Thats the best ai , i thank u am going to share with my group members by monday
This video was awesome. My understanding improved significantly. Thanks for this lecture.
Thanks for the lectures. I loved it. It helped
sir, I really need a formula for price elasticity of import and export. can you tell me ?
Succinct and straight to the point. Thank you!
thanks,this is real helpfully,keep up the good work💯
thank you for the explanation, it's magnificent :D
Awesome video for the calculation of elasticity. Big up Sir
🙂 So glad you found it helpful!
you made it simple to understand! Thank you !
when some guy on TH-cam teaches better than my actual teacher
Heyyyyyyyyyyyyy sir. Can i just ask. How do I solve for the price elasticity of demand and supply given the supply schedule?
You must have two price/ quantity points on the demand curve to find price elasticity of demand. If you're only given a supply schedule, you would be able to find elasticity of supply, but not demand.
Thank you for your efforts.
Nicely done !
So far the best one
great explanation of the concept! thank you very much!
This was wonderful and helpful
great lecture thanks!
may I know what software/program you used in your lecture? its awesome!
Thanks for watching, glad you were able to use the video. The images are simply in a Powerpoint file, and the drawing is done within Powerpoint with a Wacom drawing tablet.
thanks! more power to you. you bless others with your tutorial videos :)
Powerpoint for the images, with a Wacom drawing tablet for the written component; screen capture video produced with Camtasia. Thanks for watching and your comment!
Nice video, thanks a lot 👏
In need of assistance of how to do Absolute Value on a graph problem.
Joe, can you give me more details? What does the problem say?
Thank you so much!😀
I like the rubber band anology.
It's very understandable
would the consumer surplus not be at the top and the producer surplus at the bottom.
thanks this is so helpful
Hey...Is cooking oil inelastic?
sir watts can you brief me about where to use the basic formula and the midpoint formula
When in doubt, use the midpoint formula. The basic formula may only be used when you know the beginning and end points (e.g. you know the price of gasoline rose from $1 to $1.50, and the quantity bought dropped from 100,000 to 90,000 gallons). Here you know that % delta Q is -10%, and % delta P is 50%, so your basic elasticity coefficient works out to -10%/50% = -.2 (inelastic as we would expect). But even in this case, the midpoint formula will work just fine and give the appropriate result: % delta Q is (-10k/95k) = -10.5% and % delta P is (.50/1.25) = 40%, so your elasticity coefficient works out to -10.5%/40% = .26 (inelastic--result is not significantly different from the "basic" formula result). Hope this helps! Cheers.
Sir you just explained great but my another question is that accuracy level of elasticity in case of both the methods
Does basic and midpoint elasticity end up giving the same answer?
No
Hello ,sir how can I reach you for private tutoring
Thank you
🙏🙏🙏🙌...I've finally cleared ma worries... Thank yu so much
great video
Thanks very much 👍
12:50 But how do I know its 7,5m and 27,5. How do I calculate that
Those are the midpoints between the two quantities (5m and 10m, midpoint or avg. = 7.5m) and the two prices ($0.25 and $0.30, midpoint or avg. = $0.275). When finding the % change you take the difference divided by the midpoint (average). The formula to find this is: (starting value + ending value)/2 e.g. (5m + 10m)/2 = 15m/2 = 7.5m
Thanks😊
thank you...nice one.. :D
if a professor always spends 5%of his income for purchasing a book,the absolute value of his own price elasticity of demand for books is 100%do you agree??
At 7:30, shouldn't it be ($200-$250)/$225 = -22.2%, or am I wrong?
You are indeed right! Good catch. One of the deltas should be negative (either price or quantity) because we always have an inverse relationship between price and quantity. Fortunately for me, however, my elasticity result is still good due to the fact that we think about elasticity of demand in absolute value terms.
Thanks for your wonderful video.
3) Suppose XYZ Dairy Firm at Sululta is selling flavored milk and Yogurt in packets of 150 ml. The dairy sells 2000 packets of flavored milk and 1000 packets of Yogurt every day. The former is priced at Birr 6 and the latter at Birr 4. A market survey estimates the cross-price elasticity (both ways) to be +1.8, and the own price elasticity of flavored milk to be -1.2. The dairy is contemplating a 10% reduction in the price of flavored milk. Should it go ahead with the price reduction or not? Show your workings
💛💛
Nice
Please tell me how did you get those percentages 25% and 33%?
I believe you're talking about the problem at 5:14? In that example, price went up from $200 to $250, which is a change of +$50 divided by a starting point of $200: $50/$200 = .25 or 25%. Likewise, quantity went down from 12 to 8 units, which is a change of -4 divided by a starting point of 12: -4/12 = -.33 or -33%. Hope this answered your question!
@@tylerwatts1649 thank you 😊
@@simphiwexashe1182 Glad I could help! Thanks for using my video! :-)
Sir, do you offer private tutoring?
Not in-person, but if you have a specific question or concept you're struggling with, I could possibly do a video tutorial for you!
I do have one. I am struggling with setting up this scenario to a formula.
"As a transit planner, you must predict how many people ride commuter trains and how much revenues are generated from train fares. According to a recent study, the elasticity of demand for commuter-train rides is -0.62. The current ridership is 100,000 people per day. If the transit authority decides to raise its fares by 20%, predict the change in ridership per day."
This is actually pretty simple--let's just think it through. The elasticity coefficient of -0.62 means that the quantity demanded change is -0.62 times the price change. Thus, if price goes up by 1%, quantity purchased will decline by -0.62% (1% X -0.62). If price goes up by 20%, quantity purchased ("ridership" in the mass transit jargon) will decline by: 20% X -0.62 = 12.4%. Given that the elasticity coefficient is less than one in absolute value--indicating a product with "inelastic" demand at this price point--it makes sense intuitively that the quantity change (ridership drop) is proportionately less than the price increase: -12.4% < 20%. In other words, quantity demanded is not very sensitive to changes in price, and price increases will yield increased revenue, because although there are fewer tickets bought, the price increase more than makes up for the decline in ridership. Oh, and applying the -12.4% predicted quantity result of the 20% price increase to the 100,000 riders per day, you'll wind up with: 100,000 X (100% - 12.4%) = (100,000 X 87.6%) = 87,600. Hope this helps--cheers!
ahhh thank you sir. I was so confused but this makes so much more since.
Glad I could help! Thanks for checking out my TH-cam channel. :-)
225?
thanks a lot :)
Happy to help!
More than I failed to get in a 2 hour lecture.
Thanks so much! Let me know if there are any other economic topics/ concepts I should create a video on
when i divide 0.67/0.18 I keep getting 3.72. I'm stuck on where 3.6 comes from, someone help
Karl, thanks for pointing out that inconsistency--you are correct: it should be 3.72 (rounded down to 3.7). It looks to be simply a rounding error on my part. I'm sorry for any confusion it might have caused!
Slow down the audio please
nooo its incorrect its 200 minus 250
Oh no
Please sir, can you please slow down a bit?
click the gear icon and you can select a slower play speed for the video
He's too fast 😴
Tip: click on the gear icon (settings) in the lower right of the playback screen, and set the speed to .75 or .5 if you want to slow things down ;-)
@@tylerwatts1649 Thank you,I was struggling with the same thing too
Thank you
glad I could help!