In this lesson, our instructor Jibin Park gives an introduction on price elasticity of demand. He discusses elastic and inelastic demand, using the midpoint method to find elasticity, factors that determine price elasticity, and lastly price elasticity along the demand curve.
Price elasticity of demand is a measure of how responsive a product is to a change in price.
Inelastic demand means that an item is not very price sensitive at that price change (e < 1).
Elastic demand means that an item is price sensitive at that price change (e > 1).
The formula for elasticity of demand is % change in quantity divided by the % change in price.
Perfectly elastic is a horizontal line.
Perfectly inelastic is a vertical line.
The midpoint method in determining elasticity corrects for changes when you increase vs. when you decrease price or quantity.
Price Elasticity of Demand
Lecture Slides are screen-captured images of important points in the lecture. Students can download and print out these lecture slide images to do practice problems as well as take notes while watching the lecture.
This book created a 5-step plan to help you study more effectively, use your preparation time wisely, and get your best score. This book includes two full-length practice exams modeled on the real test, all the terms and concepts you need to know to get your best score, and your choice of three customized study schedules.
This book includes an in-depth preparation for both AP economics exams. It features two full-length practice tests, one in Microeconomics and one in Macroeconomics, and all test questions answered and explained. It also features a detailed review of all test topics, which include: supply and demand, theory of consumer choice, economics in the public sector, costs, perfect and imperfect competition, monopolies, labor resources, game theory, the national income and gross domestic product, inflation and unemployment, fiscal policy, money and banking, monetary policy, economic growth, international trade and exchange, interest rate determination, and the market for loanable funds.