Elasticity of Demand

How much does quantity demanded change when price changes? By a lot or by a little? Elasticity can help us understand this question. This video covers determinants of elasticity such as availability of substitutes, time horizon, classification of goods, nature of goods (is it a necessity or a luxury?), and the size of the purchase relative to the consumer’s budget.
Microeconomics Course: mru.io/oyv
Next video: mru.io/aqh
Help us caption & translate this video! amara.org/v/GCsX/
00:00 Introduction
00:51 Elastic vs. Inelastic
01:57 Inelastic Graph Example
02:28 Elastic Graph Example
03:18 Elasticity Rule
04:15 Determinants of Elasticity of Demand
05:09 1. Availability of Substitutes
07:31 2. Time Horizon
09:00 3. Classification of the Good (Broad vs. Narrow)
10:11 4. Nature of the Good (Necessity vs. Luxury)
11:12 5. Size of the Purchase, Relative to Your Budget
12:19 Summary

[@MarginalRevolutionUniversity]

Continue learning with practice questions: mru.io/sxs

[@jaidak941]

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love and respect from Iran

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wow. interesting and SOOO much better than whatever my microeconomics was trying to explain in a 2 hour lecture. this was clear and to the point. thank you so much!

[@yarwonbarto1400]

Thank you so much! Your explanation and examples make it so easy to understand the concept of Elasticity. I was reading the textbook and it didn't make sense, but watching this video clarifies the concept of elasticity.

[@martinepstein9826]

Another great video!
11:53 "Consumers probably won't even notice whether toothpicks are 50 cents or a dollar. That's a 50% increase in price..."
:O

[@andru5054]

+Martin Epstein from 50 cents to a dollar that`s 100% price increase, as far as I`m concerned

[@alainkalubi5542]

Well it's a 50% increase if you think that 50 cents are 50% of a dollar, instead of viewing this as 1 dollar is a 100% increase of 50 cent. But that's just the way they you look at it.

[@klonisarcher6553]

I really like your videos. They have helped me alot. However, changing the price in toothpicks from fifty cents to a dollar is a 100% increase. 50% increase would be seventy-five cents.

[@tushargautam1]

It will be clear in the next video actually he used the average to calculate percentage changes

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[@wizardOfRobots]

Beautiful intro to elasticity of demand...

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Thank you for the clear explanation

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[@JobinJohnsonArtwork]

Please explain total outlay method and ARC elasticity of demand

[@drakewilliams10dw]

Thank you

[@SquishyAcePilot]

Thank you.

[@Mrparthamanna]

Thank you sir.

[@erudaishanker]

Thank you sir for such a simple explanation!!!

[@cdelcarmen90]

awesome!!!

[@ShivDh1]

thanks sir..
I have a question that my teacher asked me..
the question is that "why price is on y axis and quantity of demand is on x axis"??

[@MarginalRevolutionUniversity]

+Shiv Shanker You should review some of the videos from earlier in the course. We begin by covering the demand and supply curves, and equilibrium price. These should help with your homework. Good luck! - Meg (Link: th-cam.com/video/7eZcPs9z9OA/w-d-xo.html&nohtml5=False)

[@ShivDh1]

Marginal Revolution University thanks sir

[@doumouya100]

Well understood

[@kinarroo2135]

Thank you!!!

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Thank you ❤

[@joelj7812]

It's one of those foundational concepts

[@chitsein4161]

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[@msjadoun9620]

very thanks

[@joelj7812]

On the elastic demand curve , the quantity demanded is more responsive to the price than it is on the the inelastic demand curve

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fantastic

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[@joelj7812]

The narrower the classification the fewer substitutes and the more elastic the curve

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thank uuu

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Now I wonder why I didn't understood from this man... the whole year is wasted eh! 🙂

[@childofgod2471]

$0.50 to $1.00 for the price of toothpicks is a 100% increase in price, not 50%. Just to illustrate that it's an even larger price increase than you stated, and still it isn't considered a big deal.

[@youtubeenjoyer199]

the reponsiveness of demand to a change in price

[@fahimfahivlogs]

is there any pdf file copy for this video ?

[@MarginalRevolutionUniversity]

No, there's just the video. Sorry about that! -Meg

[@centexn]

How bout we get working on it. Sorry about that!!

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+centexn relax

[@berihunephrem4100]

Ethiopian coffee, elastic demand loved

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[@joelj7812]

The quantity is changing a lot in response the price

[@joelj7812]

Linear

[@henrikhove7102]

Toothpicks increase in price from 0.5 to 1 is a 100% increase in price isn't it?

[@schanemassey3861]

yes but its a relatively small increase to a consumer, thus the quantity demanded will not change.

[@mugojonah9452]

Masterpiece teaching five star

[@nhattan6868]

4:43

[@leratomotimele5692]

Can one become an economist without maths?

[@joelj7812]

I would bargain when the purchase is a large fraction of the budget

[@joelj7812]

There would be more Sprawl if the price is low

[@Navak_]

It's honestly infuriating that the x axis (input) is quantity sold and the y axis (output) is price. Who the F did that bit of ass-backward reasoning? I have to reverse all of my intuitions about how to use the supply and demand curves.
You guys even say "price causes a change in quantity demanded" because that's absolutely the common sense way to think about it. You have direct control over the price and only indirect control over the quantity demanded via the price. But my brain is wired from a decade of math class to look to the x axis for the input (which would be PRICE) and the y axis for output (which is QUANTITY).

[@Navak_]

"Although it is normal to regard the quantity demanded and the quantity supplied as functions of the price of the goods, the standard graphical representation, usually attributed to Alfred Marshall, has price on the vertical axis and quantity on the horizontal axis."
en.wikipedia.org/wiki/Supply_and_demand
ALFRED MARSHALL

[@iantobrewer3896]

[@joelj7812]

People in Europe adjusted due to taxes

[@joelj7812]

Ethiopia

[@joelj7812]

Small items, in the short run , more inelastic

[@thompsonsummers1557]

why?

[@sirdondaniel]

11:53 - from $0.5 to $1 it's a 100% increase. Sorry! Just trying to look smart here.

[@joelj7812]

Do monopoly
Subsidy

[@sohanshrestha9466]

If the price of a toothpaste goes from 50 cents to a dollar , it will be 100% change in the price... Not 50

[@joelj7812]

Toothpick

[@joelj7812]

Generic aspirin

[@philippesenechal8756]

ρ π Δ β

[@stoychorusinov5519]

Where is the calculus. I need to understand those derivatives common bro, pls . That’s fake microeconomics.

[@joelj7812]

Moped