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Jibin Park

Jibin Park

Price Elasticity of Demand

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Table of Contents

Section 1: Introduction
Intro to Economics

22m 40s

Intro
0:00
Lesson Overview
0:09
Basic Economic Concepts
1:07
What is Economics?
1:47
Definition of Economics
1:50
Scarcity
2:25
Four Factors of Production (Resources)
3:02
Land
3:26
Labor
3:43
Capital
4:02
Entrepreneurship
4:35
Needs vs. Wants
5:00
Needs
5:22
Wants
6:01
People Choose
8:46
Need
8:48
Economics is About Making Choices
8:59
Every Choice Has a Cost
9:29
Opportunity Cost
9:43
Trade-Off
9:55
Positive Economics vs. Normative Economics
10:23
Positive Economics
10:32
Normative Economics
11:13
Marginal Analysis
12:29
All or Nothing Propositions
12:48
To Consume the Next Unit or Not
12:52
Key to Understanding Economics
12:57
Example 1
13:29
Example 2
14:46
Example 3
17:02
Example 4
20:48
Production Possibilities Frontier

17m 47s

Intro
0:00
Lesson Overview
0:08
I. Basic Economic Concepts
0:48
Production Possibilities Frontier
1:23
Points of Efficiency
1:40
Points of Underutilization
1:43
Famous 'Guns or Butter' Analogy
2:20
Increasing Opportunity Cost
2:59
Law of Increasing Opportunity Cost
3:07
Example: Economy of DVDs and Wine
3:35
Constant Opportunity Cost
6:26
Definition of Constant Opportunity Cost
6:35
Example: Economy of Soda and Flags
6:50
Example 1
9:35
Example 2
11:06
Example 3
12:54
Example 4
14:19
Example 5
16:28
Comparative Advantage & Trade

48m 19s

Intro
0:00
Lesson Overview
0:07
I. Basic Economic Concepts
0:45
Trade and Specialization
1:36
I, Pencil
3:29
Market Economy
4:28
Command Economy
5:02
Mixed Economy
5:46
Absolute Advantage
6:29
Better at Producing a Particular Product
6:35
Example
6:45
Comparative Advantage
9:09
Lower Opportunity Cost in Producing a Particular Product
9:17
Example
9:26
Comparative Advantage & PPF Graph
16:08
Example 1
20:41
Example 2
24:29
Example 3
29:13
Example 4
32:52
Example 5
37:46
Example 6
43:39
Utility Maximization

31m 21s

Intro
0:00
Lesson Overview
0:14
I. Basic Economic Concepts
0:47
Utility vs. Marginal Utility
2:18
Utility
2:22
Marginal Utility
2:53
Examples
3:02
Marginal Utility Per Dollar
4:07
Definition of Marginal Utility Per Dollar
4:12
Constrained by a Budget
4:33
Role of Scarcity
4:35
Diminishing Marginal Utility
7:20
Definition of Diminishing Marginal Utility
7:24
Krispy Kreme Experiment
8:46
Optimal Consumption Bundle
9:59
Optimal Consumption Bundle Rule
10:02
Select the Higher Marginal Utility Per Dollar
10:34
Value Begins to Fall
10:42
Example 1
11:04
Example 2
14:15
Example 3
18:16
Example 4
21:13
Example 5
24:09
Example 6
27:50
Section 2: Supply & Demand
Price & Quantity

39m 7s

Intro
0:00
Lesson Overview
0:14
II. Product Markets
1:05
Supply and Demand
2:22
Supply and Demand Model
2:24
Demand Curve
2:28
Supply Curve
2:43
Factors
2:56
Equilibrium Price and Quantity
3:45
Demand Schedule and Demand Curve
3:56
Market Demand Schedule
3:59
Market Demand Curve
4:07
Example
4:18
Shifts of the Demand Curve
9:39
Changes in the Prices of Related Goods
9:47
Changes in Income
12:14
Changes in Tastes
12:57
Changes in Expectations
13:58
Increase in Demand (Rightward Shift)
14:44
Decrease in Demand (Leftward Shift)
15:37
Supply Schedule and Supply Curve
16:27
Market Supply Schedule
16:37
Market Supply Curve
16:46
Example
16:52
Shifts of the Supply Curve
20:19
Changes in Input Prices
20:29
Changes in Technology
20:43
Changes in Expectations
21:09
Increase in Supply (Rightward Shift)
21:41
Decrease in Supply (Leftward Shift)
22:51
Supply, Demand, and Equilibrium
23:45
Equilibrium Price
23:50
Equilibrium Quantity
23:57
Equilibrium
24:05
Surplus and Shortage
25:15
Surplus
25:19
Shortage
25:30
Example
25:43
Example 1
29:26
Example 2
30:18
Example 3
31:37
Example 4
34:11
Example 5
36:37
Supply & Demand

25m 11s

Intro
0:00
Lesson Overview
0:13
II. Product Markets
0:57
Shifts to the Demand or Supply Curve
1:50
Demand Shift to the Right
1:55
Demand Shift to the Left
2:11
Supply Shift to the Right
2:27
Supply Shift to the Left
2:43
Example 1
2:59
Example 2
4:28
Example 3
6:13
Example 4
8:17
Shifts of Both the Demand and Supply Curves
10:05
Demand and Supply Shift to the Right
10:52
Demand and Supply Shift to the Left
11:15
Supply Shift to the Left and Demand Shift to the Right
11:52
Supply Shift to the Right and Demand Shift to the Left
12:17
Example 5
13:44
Example 6
17:14
Example 7
19:21
Example 8
21:43
Price Controls

27m 5s

Intro
0:00
Lesson Overview
0:12
II. Product Markets
1:01
Why Price Controls are Inefficient
1:51
Price Controls
3:10
Price Ceiling
3:34
Price Floor
3:41
Effective Price Ceiling
4:08
Rent Control
4:16
Effective Price Ceiling Must be Below Equilibrium Price
4:27
How a Price Ceiling Causes Inefficiency
6:36
Inefficiency Allocation to Consumers
6:50
Wasted Resources
7:20
Inefficiently Low Quality
7:51
Effective Price Floor
8:45
Minimum Wage
8:53
Effective Price Floors Must be Above Equilibrium Price
9:40
Price Floor on Agricultural Products
13:42
'Butter' Mountain
16:09
How a Price Floor Causes Inefficiency
17:41
Inefficiently Low Quantity
17:47
Wasted Resources
18:11
Inefficiently High Quality
18:39
Example 1
20:05
Example 2
21:12
Example 3
22:36
Example 4
23:46
Example 5
25:06
Price Elasticity of Demand

58m 45s

Intro
0:00
Lesson Overview
0:10
II. Product Markets
1:26
What is Elasticity of Demand?
2:37
Definition of Price Elasticity of Demand
2:40
Ceteris Paribus
3:35
Elastic Demand
6:57
e>1
7:02
Product is Price-Sensitive
7:47
Flat Demand Curve
8:05
Inelastic Demand
12:02
e<1
12:06
Product is Not Sensitive to Price Change
13:14
Steep Demand Curve
14:09
Example 1
19:20
Example 2
25:01
Using the Midpoint Method to Find Elasticity
30:40
Own Price Elasticity
31:22
Absolute Value Removes Negative Sign
32:20
Example 3
32:38
Example 4
38:37
Factors That Determine Price Elasticity
44:06
Whether Close Substitutes are Available
44:13
Whether the Good is a Necessity or a Luxury
44:48
Time
45:45
Share of Income Spent of the Good
46:32
Price Elasticity Along the Demand Curve
47:11
Example 5
56:22
Income, Cross-Price & Supply Elasticities

39m

Intro
0:00
Lesson Overview
0:16
II. Product Markets
1:31
What is Cross-Price Elasticity of Demand?
2:57
Definition of Cross-Price Elasticity of Demand
3:01
Formula
3:16
Substitutes
6:24
Definition of Substitutes
6:26
Items Match as Substitutes
6:50
If the Price of Good A Increases, then the Quantity Demanded of Good Will Increase
7:34
If the Price of Good A Decreases, then the Quantity Demanded of Good Will Decrease
8:08
Example 1
8:34
Complements
9:35
Definition of Complements
9:44
Items Match as Complements
10:01
If the Price of Good A Decreases, then the Quantity Demanded of Good Will Increase
11:32
If the Price of Good A Increases, then the Quantity Demanded of Good Will Decrease
11:48
Example 2
12:38
Definition of Income Elasticity of Demand
14:30
Normal Good
15:08
Inferior Good
15:43
Income-Elastic
16:56
Income-Inelastic
17:04
Formula for Income Elasticity of Demand
17:20
Formula
17:44
Example 3
21:39
Example 4
24:52
Price Elasticity of Supply
27:59
Definition of Price Elasticity of Supply
28:10
Formula
28:18
Availability of Inputs Affects Elasticity
28:46
Two Extreme Cases of Supply Price Elasticity
29:35
Example 5
32:41
Total Surplus, Deadweight Loss & World Trade

47m 51s

Intro
0:00
Lesson Overview
0:16
II. Product Markets
1:25
What is Consumer Surplus?
2:32
Definition of Consumer Surplus
2:35
Supply and Demand Graph
2:44
What is Producer Surplus?
5:20
Definition of Producer Surplus
5:40
Supply and Demand Graph
5:52
CS + PS
8:52
Example 1
10:17
Example 2
12:21
How Does a Tax Affect Hotel Owners?
14:19
Excise Tax on Hotel Owners
14:37
Equilibrium Price
14:42
Excise Tax on Hotel Guests
19:35
Equilibrium Price
20:03
Tax Incidence
20:13
Example 3
22:36
International Trade
26:03
Autarky
26:10
Importing Countries
28:21
World Price
28:22
Positive Net Gain
28:49
Exporting Countries
32:28
World Price
33:35
Positive Net Gain
33:43
Example 4
37:46
Production Function & Firm Costs

41m 14s

Intro
0:00
Lesson Overview
0:09
II. Product Markets
0:55
Long Run vs. Short Run
1:46
Production Function
1:51
Fixed Input
2:04
Variable Input
2:20
Long Run
2:36
Short Run
2:54
Marginal Product of Labor
3:03
Definition of Marginal Product of Labor
3:06
Example MPL Curve
3:50
Different Types of Marginal Returns
7:18
Increasing Marginal Returns
7:22
Diminishing Marginal Returns
7:49
Negative Marginal Returns
8:00
Was Thomas Malthus Correct?
10:59
Thomas Malthus Prediction
11:10
Dismal Science
11:29
Fixed, Variable and Total Cost
12:34
Fixed Cost
12:45
Variable Cost
13:06
Total Cost
13:23
Average Cost
15:27
Marginal Costs
22:17
Relationship Between ATC and MC Curves
27:02
Minimum-Cost Output
27:20
Output Less Than Minimum-Cost Output
27:55
Output Greater Than Minimum-Cost Output
28:02
Just Do It, Smile and Smirk
30:09
MC Curve
30:24
ATC Curve
30:45
AVC Curve
31:09
True or False, or Uncertain?
32:57
Example 1
32:59
Example 2
34:36
Short-Run Total Cost Function Example
38:19
Long-Run Costs & Economies of Scale

32m 23s

Intro
0:00
Lesson Overview
0:10
II. Product Markets
1:10
Short-Run vs. Long-Run Costs
1:46
Business Decisions
1:51
High Fixed Cost
2:19
Low Fixed Cost
2:28
Example
3:03
Short-Run and Long Run ATC Curves
8:25
Returns to Scale
13:25
Economies of Scale
13:34
Diseconomies of Scale
14:27
Sources of Economies of Scale
16:18
Increased Specialization That Larger Output Levels Allow
16:27
Large Initial Set-Up Cost
17:00
Network Externalities
17:51
Sunk Cost
19:05
Definition of Sunk Cost
19:11
Example
19:52
Fill in the Following Cost Table
22:02
Short-Run vs. Long-Run Example
26:43
Section 3: Market Structures
Perfect Competition

47m 49s

Intro
0:00
Lesson Overview
0:14
II. Product Markets
1:31
Types of Market Structure
2:47
Perfect Competition
2:58
Monopoly
3:33
Oligopoly
4:08
Monopolistic Competition
4:45
Perfect Competition
5:35
Price-Taking Firm
5:45
Price-Taking Consumer
6:14
Perfectly Competitive Market
6:55
Three Characteristics of Perfect Competition
7:24
Production and Profits
9:12
Optimal Output Rule
9:20
The Industry Supply Curve
12:27
Definition of Industry Supply Curve
12:35
Shut-Down Price
12:49
Price Above AVC
13:13
The Long-Run Industry Supply Curve
18:01
Definition of Long-Run Industry Supply Curve
18:07
Example Graphs
19:39
The Effect of an Increase in Demand
25:19
Increase in Demand
25:24
Increase in Demand Raises Price and Profit
27:03
Perfect Competition in Long-Run Equilibrium
30:45
No Economic Profit
30:57
No Firms Enter or Leave
31:37
The Market is Always Right
31:50
Perfect Competition Making Short-Run Profit
34:00
Perfect Competition Incurring Short-Run Loss
38:57
Summary of Profitability and Production
43:20
Monopoly

42m 43s

Intro
0:00
Lesson Overview
0:12
II. Product Markets
1:13
Characteristics of a Monopoly
2:53
Control of a Scarce Resource or Input
3:18
Economies of Scale
3:40
Technological Superiority
4:25
Government Monopolies
5:10
Monopoly and Price Discrimination
5:39
Price Discrimination
5:53
Perfect Price Discrimination
8:11
Monopoly Making a Profit
12:08
Monopoly Incurring a Loss
20:42
Monopoly vs. Perfect Competition
23:47
P=MC
23:55
P>MR=MC
24:09
Monopoly
24:25
Reading a Monopoly Graph
29:17
Monopoly & Public Policy

42m 46s

Intro
0:00
Lesson Overview
0:09
Monopoly vs. Perfect Competition (Surplus)
1:06
Deadweight Loss
1:43
Welfare Effects of Monopoly
7:02
Increase Profits, Decrease Consumer Surplus
7:07
Perfectly Competitive Firms Profit-Maximize
7:47
Deadweight Loss
8:15
Public Ownership of Monopolies
8:50
In Theory
10:16
In Practice
10:43
Unregulated vs. Regulated Natural Monopoly
12:03
Unregulated Monopoly
13:14
Regulated Monopoly
13:20
Monopoly Practice Problem 1
18:26
Monopoly Practice Problem 2
21:34
Monopoly Practice Problem 3
24:34
Monopoly Practice Problem 4
26:21
More Monopoly Practice 1
31:50
More Monopoly Practice 2
34:57
More Monopoly Practice 3
37:17
More Monopoly Practice 4
39:49
Oligopoly & Game Theory

50m 43s

Intro
0:00
Lesson Overview
0:08
Characteristics of an Oligopoly
1:06
Interdependence
1:12
Few Sellers with Significant Control of Pricing
1:32
Duopoly
1:48
Incentive to Collude
1:59
Cartel
2:24
Game Theory
3:33
Two-Player Model
3:46
Application sin Economics, Military Strategy, Politics
4:39
Nash Equilibrium
5:05
Game Theory (Prisoner's Dilemma)
5:31
Dominant Strategy
5:41
Prisoner's Dilemma
6:21
Game Theory (Chicken)
12:37
Game Theory (One Dominant, One Not)
19:54
Overcoming Prisoner's Dilemma
26:29
Strategic Behavior
27:31
Tit for Tat Strategy
27:37
Tacit Collusion
28:17
Collusion
28:46
(Yet Another) Game Theory Example 1
29:14
(Yet Another) Game Theory Example 2
33:02
(Yet Another) Game Theory Example 3
34:40
(Yet Another) Game Theory Example 4
37:12
Final Game Theory Example 1
39:21
Final Game Theory Example 2
41:39
Final Game Theory Example 3
43:10
Final Game Theory Example 4
45:29
Monopolistic Competition

26m 54s

Intro
0:00
Lesson Overview
0:09
Characteristics of Monopolistic Competition
1:01
Large Number of Competing Firms
1:13
Differentiated Products
2:05
Free Entry and Exit
3:09
Profitable Firm in Monopolistic Competition
4:10
Unprofitable Firm in Monopolistic Competition
7:54
Long-Run Zero-Profit Equilibrium
10:15
Profitable
10:23
Unprofitable
10:46
Demand Curve
11:10
Comparing Perfect and Monopolistic Competition
13:36
Both
13:42
Perfect Competition
13:57
Monopolistic Competition
14:11
Product Differentiation and Advertising
18:44
Differentiation by Style or Type
19:04
Differentiation by Location
19:45
Differentiation by Quality
20:23
Ford vs. General Motors
21:06
Monopolistic Competition Example
22:28
Section 4: Factor Markets
Factor Markets

43m 37s

Intro
0:00
Lesson Overview
0:12
Economy's Factors of Production
1:43
Land
2:21
Labor
2:31
Capital
2:39
Entrepreneurship
3:22
Why Factor Prices Matter
4:01
Derived Demand
4:05
Example
4:38
Total Product vs. Marginal Product
7:12
Total Product
7:40
Marginal Product
7:52
Value of the Marginal Product
11:06
Value of the Marginal Product of Labor Formula
11:26
Hiring Decision Rule
13:50
Graphing the VMPL (or MRP) Curve
16:11
Shifts of the Factor Demand Curve
18:19
Changes in the Price of Goods
18:26
Changes in Supply of Other Factors
20:08
Changes in Technology
21:19
Factor Market Example
22:32
Another Factor Market Example
32:48
Labor Supply & Cost Minimization

46m 6s

Intro
0:00
Lesson Overview
0:12
Work vs. Leisure
1:09
Labor Market
1:45
Individual Labor Supply Curve
2:32
Substitution Effect
2:47
Income Effect
2:55
Backward-Bending Labor Supply Curve
5:31
Shifts of the Labor Supply Curve
9:59
Changes in Preferences and Social Norms
10:12
Changes in Population
10:49
Changes in Opportunities
11:12
Changes in Wealth
13:14
Determining the Optimal Input Mix
14:49
Substitutes and Complements in Factor Markets
15:25
Cost Minimization
16:34
Capital vs. Labor
20:05
Example 1
20:08
Example 2
23:39
Theories of Income Distribution
25:51
Marginal Productivity and Wage Inequality
26:09
Market Power
28:02
Efficiency Wages
28:44
Discrimination
30:48
Factor Market Example 1
32:59
Factor Market Example 2
39:05
Factor Market Example 3
42:44
Section 5: Market Failure and the Role of Government
Positive & Negative Externalities

39m 21s

Intro
0:00
Lesson Overview
0:07
The Economics of Pollution
1:06
Marginal Social Cost of Pollution
2:20
Marginal Social Benefit of Pollution
2:49
Socially Optimal Quantity of Pollution
3:08
Socially Optimal Quantity of Pollution
3:38
Upward-Sloping MSC Curve
3:43
Downward-Sloping MSB Curve
4:31
Socially Optimal Point
4:51
Market-Determined Quantity of Pollution
5:30
Graphing a Negative Externality
7:28
Negative Externality
7:52
High Market Price, Low Market Quantity
8:25
Graphing a Positive Externality
11:49
Positive Externality
11:55
Low market Price, Low Market Quantity
12:39
Government Solution
15:17
Correct a Negative Externality
15:19
Correct a Positive Externality
15:31
Private (or Coase) Solution
20:29
Coase Theorem
20:30
Example
20:58
Negative Externality Example
23:14
Positive Externality Example
26:49
Externality Example
30:22
Another Externality Example
33:01
Final Externality Example
35:37
Public vs. Private Goods

26m 45s

Intro
0:00
Lesson Overview
0:10
Characteristics of Goods
1:53
Rival
2:27
Nonrival
2:39
Excludable
3:22
Nonexcludable
4:01
Four Types of Goods
5:08
Private Goods
5:12
Public Goods
5:19
Common Resource
7:17
Artificially Scarce Good
8:32
Private Goods
10:43
Rival and Excludable
10:47
Free-Rider Problem
11:21
Most Items are Private Foods
12:24
Public Goods
12:48
Nonrival and Nonexcludable
12:52
Suffers from the Free-Rider Problem
12:56
Common Resources
15:27
Incentive to Overuse
15:55
Tragedy of the Commons
16:47
Artificially Scarce Resources
18:47
Marginal Cost to Society Watching Pay-Per-View
19:19
Computer Software and Audio Files Share Same Characteristic
20:29
Healthcare and Government
22:02
Income Inequality & Income Distribution

31m 8s

Intro
0:00
Lesson Overview
0:10
The Problem of Poverty
1:13
Definition of Poverty
1:17
Poverty Threshold
1:43
Who are the Poor?
3:48
1 in 7 People in 2009
3:53
Female-Headed Households
5:05
Part-Time Workers
5:40
What Causes Poverty?
6:14
Lack of Education
6:23
1979 Average Hourly Wage
17:03
2009 College Premium
7:48
Other Causes of Poverty
8:35
Economic Inequality
9:09
Mean Income and Median Income
9:24
Income is Unequally Distributed
10:43
Gini Coefficient
13:33
Definition of Gini Coefficient
13:35
High Levels of Inequality
13:57
Gini Coefficient in the United States
14:26
High Gini Levels
14:41
Lorenz Curve
14:47
United States Rates of Income Growth
17:27
Three Types of Taxes
19:54
Proportional Tax
20:39
Regressive Tax
21:16
Progressive Tax
22:28
Means-Tested Programs
24:46
Welfare
24:52
Temporary Aid for Needy Families
25:00
Supplemental Security Income
26:05
Negative Income Tax
26:18
Food Stamps and Medicaid
27:00
Social Security and Unemployment
27:35
Retirement Income
27:56
Wages Taxed
28:29
Unemployment Insurance
28:51
Trade-Offs
30:21
Section 6: Practice AP Exam
AP Practice Exam: Multiple Choice, Part I

1h 15m 2s

Intro
0:00
Question 1
0:27
Question 2
1:48
Question 3
2:53
Question 4
4:43
Question 5
6:37
Question 6
8:10
Question 7
9:19
Question 8
11:01
Question 9
12:03
Question 10
14:37
Question 11
15:19
Question 12
16:35
Question 13
17:41
Question 14
19:24
Question 15
20:15
Question 16
21:08
Question 17
21:49
Question 18
23:17
Question 19
23:59
Question 20
24:48
Question 21
25:33
Question 22
27:19
Question 23
28:03
Question 24
29:52
Question 25
30:28
Question 26
31:19
Question 27
33:11
Question 28
34:55
Question 29
36:14
Question 30
37:55
Question 31
39:13
Question 32
40:27
Question 33
41:57
Question 34
43:26
Question 35
45:40
Question 36
46:37
Question 37
47:22
Question 38
49:09
Question 39
50:09
Question 40
31:37
Question 41
52:43
Question 42
55:35
Question 43
57:02
Question 44
58:27
Question 45
59:10
Question 46
1:00:00
Question 47
1:01:22
Question 48
1:01:52
Question 49
1:03:20
Question 50
1:05:09
Question 51
1:05:45
Question 52
1:06:35
Question 53
1:07:09
Question 54
1:07:54
Question 55
1:09:39
Question 56
1:10:25
Question 57
1:11:19
Question 58
1:12:31
Question 59
1:13:02
Question 60
1:14:31
AP Practice Exam: Multiple Choice, Part II

29m 18s

Intro
0:00
Question 1
0:22
Question 2
1:04
Question 3
2:54
Question 4
3:34
Question 5
4:48
Question 6
6:12
Question 7
7:40
Question 8
8:31
Question 9
9:48
Question 10
11:16
Question 11
11:48
Question 12
12:55
Question 13
14:40
Question 14
15:47
Question 15
17:05
Question 16
17:30
Question 17
17:55
Question 18
19:10
Question 19
19:57
Question 20
22:49
Question 21
23:53
Question 22
24:28
Question 23
24:51
Question 24
27:25
AP Practice Exam: Free Response, 2013

24m 18s

Intro
0:00
Question 1
0:17
Question 2
12:37
Question 3
19:32
AP Practice Exam: Free Response, 2012

22m 32s

Intro
0:00
Question 1
0:20
Question 2
6:47
Question 3
14:57
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Lecture Comments (52)

0 answers

Post by Hitesh Patel on January 5 at 10:07:53 AM

For example 2, wouldn't the difference in Total Revenue be $500?

1 answer

Last reply by: Professor Jibin Park
Mon Jun 15, 2020 8:06 PM

Post by Andria Xu on June 13, 2020

Wait, why would the answers for the mid point method and the answers for the point method be different? Aren't they both percent change in quantity over percent change in price?

2 answers

Last reply by: Professor Jibin Park
Tue May 12, 2020 4:54 AM

Post by Claire Zhang on May 11, 2020

hi prof,  i think i don't understand why the results are different when you use the two formulas in example 4,  i mean you are looking for the Ed under the same situation, so why are they different?

1 answer

Last reply by: Professor Jibin Park
Thu Mar 15, 2018 10:44 PM

Post by Grace Shen on March 15, 2018

Hi Profesor,

For example 3 under the midpoint method, if two slices of pizza are $4, wouldn't the price for one just be $2? Therefore, shouldn't the total revenue be 2times 10?  Thanks!

1 answer

Last reply by: Professor Jibin Park
Sat Oct 15, 2016 3:25 PM

Post by derui wang on October 6, 2016

When e?1? demand is still elastic??? Isn't it inelastic?

1 answer

Last reply by: Professor Jibin Park
Wed Jun 1, 2016 5:11 PM

Post by Mohsin Alibrahim on May 26, 2016

Hello Professor Park
Is unit Elastic point where elasticity equal 1 ?

2 answers

Last reply by: Irene Chia
Tue Sep 15, 2015 12:42 AM

Post by Jim Tang on July 19, 2015

prob super picky question, but i believe ur best suited to answer this since you've been grading these ap exams for a long time!

in the lecture, you wrote (4-5)/4 = | -1/4 |, which, in itself, is not a true mathematical statement. though most people will understand how the absolute values factors into elasticity of demand, do graders take off points bc of small mathematical mishaps?

1 answer

Last reply by: Professor Jibin Park
Sun Jul 19, 2015 10:02 PM

Post by Jim Tang on July 19, 2015

for example 3, are you assuming that the price of two slices is $5? is it better to use $/slice bc $/2 slices?

3 answers

Last reply by: Professor Jibin Park
Tue Nov 10, 2015 12:06 PM

Post by Jim Tang on July 19, 2015

wait, shouldn't it say if e<1, then demand is inelastic?

2 answers

Last reply by: Siyun Liu
Thu Feb 5, 2015 7:59 PM

Post by Siyun Liu on February 4, 2015

In example 2, since Q1=200, doesn't e equal 1? If so, isn't this product's total revenue supposed to remain the same? So how comes the total revenue decreased after the rise in price?
Thank you!

1 answer

Last reply by: Professor Jibin Park
Mon Jan 12, 2015 5:21 PM

Post by Carlos islas on November 19, 2014

In example #1 shouldn't your TR2 be p*q=$80*100=8000?

1 answer

Last reply by: Professor Jibin Park
Tue Nov 4, 2014 6:41 PM

Post by Rebecca Dai on November 4, 2014

Professor,
I saw a different function in text book. E of demand= (change in Q/((Q1+Q2)/2))/change in P/((P1+P2)/2). And I plugged in some real numbers and got different results from the function you talks about in the lecture. Which one is right? Thanks!

1 answer

Last reply by: Professor Jibin Park
Wed Oct 22, 2014 5:38 PM

Post by Rebecca Dai on October 21, 2014

Where can I get past ap exam paper? Could you send them to me if you have it? Thanks

2 answers

Last reply by: Professor Jibin Park
Tue Oct 21, 2014 5:27 PM

Post by Rebecca Dai on October 21, 2014

Does unit-elastic only refer to the point instead of a segment? Thanks.

1 answer

Last reply by: Professor Jibin Park
Tue Oct 21, 2014 5:07 PM

Post by Rebecca Dai on October 21, 2014

In the factor of time that determines elasticity demand, is it very similar to the substitute? Because people tend to have more substitute over time.

2 answers

Last reply by: Professor Jibin Park
Tue Oct 21, 2014 5:07 PM

Post by Rebecca Dai on October 21, 2014

What does elasticity demand represent? What does it tell us literally? Thanks.

2 answers

Last reply by: Professor Jibin Park
Tue Oct 21, 2014 5:03 PM

Post by Rebecca Dai on October 21, 2014

1. What is two ways of calculating PED contradict each other? Like one proves it's elastic and the other one proves it's not.
2. If E is 1, is it neither elastic nor inelastic?
Thank you!

1 answer

Last reply by: Professor Jibin Park
Mon Aug 11, 2014 2:21 PM

Post by Tyler Zhang on August 11, 2014

So for questions where the elasticity is asked, there are two possible answers? One from the regular elasticity formula and one from the midpoint method..will both be marked correct?

1 answer

Last reply by: Professor Jibin Park
Thu Aug 7, 2014 7:12 PM

Post by Tyler Zhang on August 7, 2014

Why are there two different values for elasticity when using the midpoint formula as opposed to using the price elasticity of demand formula? What do each of the numbers mean? Which method is more accurate?

1 answer

Last reply by: Professor Jibin Park
Wed Aug 6, 2014 3:56 PM

Post by Tyler Zhang on August 6, 2014

For example 1, why are the revenues not 8000 and 9000? Why are they both 9000..

0 answers

Post by Harshil Bansal on May 5, 2014

Where can I get a bank of multiple choice questions to practice from?

0 answers

Post by Professor Jibin Park on April 23, 2014

Hello, there, Educator community. Have a great day!

1 answer

Last reply by: Professor Jibin Park
Sun Jan 12, 2014 6:58 PM

Post by Jessie Xiao on January 12, 2014

what happens when elasticity of demmand equals 1?

1 answer

Last reply by: Professor Jibin Park
Sun Jan 12, 2014 6:54 PM

Post by Jessie Xiao on January 12, 2014

you made mistakes in example 1 and 2

Price Elasticity of Demand

  • 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.

  • Intro 0:00
  • Lesson Overview 0:10
  • II. Product Markets 1:26
  • What is Elasticity of Demand? 2:37
    • Definition of Price Elasticity of Demand
    • Ceteris Paribus
  • Elastic Demand 6:57
    • e>1
    • Product is Price-Sensitive
    • Flat Demand Curve
  • Inelastic Demand 12:02
    • e<1
    • Product is Not Sensitive to Price Change
    • Steep Demand Curve
  • Example 1 19:20
  • Example 2 25:01
  • Using the Midpoint Method to Find Elasticity 30:40
    • Own Price Elasticity
    • Absolute Value Removes Negative Sign
  • Example 3 32:38
  • Example 4 38:37
  • Factors That Determine Price Elasticity 44:06
    • Whether Close Substitutes are Available
    • Whether the Good is a Necessity or a Luxury
    • Time
    • Share of Income Spent of the Good
  • Price Elasticity Along the Demand Curve 47:11
  • Example 5 56:22

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