Price elasticity of demand using the midpoint method | Elasticity | Microeconomics | Khan Academy

[@mujahidsyed2917]

It's crazy. I come to this dude for physics and chem and now i'm here for econ and even art history. Dude is unreal!

[@ThiagaumBr]

Thanks for making this content free despite all the complaints I see in here. Keep up the good work.

[@yehuawang7553]

You teach me math since I am in grade 6, then chemistry, biology, physics... Now you are helping me with econ. Five years ago I said I will donate to Khan Academy one day I earn my own money because you helped me so much. Sorry, I finally recalled this promise. Please continue with great work educating students! My life path would be completely different without Khan Academy.

[@RankaNikunj]

For those who are asking why our method differs for his. Here's the answer There are two ways of calculating PED( price elasticity of demand) 1) *Arc elasticity* 2) *Point elasticity* This this video, he did using arc elasticity, which uses *averages* in denominator.

[@ilaydagirgin4743]

hey, I hope you answer my question, how do we decide what to use when? I mean when to use Arc e. and when to use Point e.? our tutor uses the point e. formula for example and I feel super confused

[@sashagaybennett3133]

i don't think you know how much you're videos are saving my life , i wish i could shake your hand ,omg

[@oliviermboma1115]

donate

[@nefo706]

you sir have no idea about how much your videos are saving my life. You are the reason why I'm passing in Biology and Economics. keep going you

[@pgdm-bcimr2507]

Just a day before my exams and all economics concepts are going bouncer. Your videos are truly saviour

[@grantdavis9812]

This guy pops up everywhere for my classes. Solid narrative voice, and breaks things down incredibly well.

[@rakeshranjan5812]

economics exam on next Monday......tensed!!!!!!!thnxx to all this coz nothing had been taught in our school...... nothing goes in my mind when the teacher teaches....

[@guypurson2353]

Will everyone stop complaining! Khan Academy is one of the greatest learning environments on the internet besides Crash Course. If you want to complain about everything, go read one of those thick and dusty textbooks that brought you here in the first place. No? Then shut up.

[@hannahzubkoff9935]

Youre a life saver, I can NOT understand my professor at all and her examples make me so confused. Went from understanding nothing to everything, thank u

[@1chaft]

study tip: play this at 1.5 speed and save time and deal with less pauses

[@beardededdie284]

You're a saint.

[@pushkarkulkarni4861]

Yeah it works

[@autistinquisitor9441]

Thanks.

[@chalkchalker7084]

the guy is like:"so, change in price chaaange in price change in price? chaaange in price change in price

[@dolliekwong8811]

Nice hahahaha

[@etch.asketch2420]

I've been watching this guy's videos for months and I've only just noticed he says everything at least twice. Now it's all I can hear...

[@taiwoakeem8125]

Don't understand why most people are saying the solvings are incorrect or confusing. But the thing is You can pnly use two methods to solve for your PED, which are; 1. point method or 2. The Arc method(mid point) But, Economist use mostly the Arc point method bcs it is the most Acceptable and most Accurate btwn the two, depending also on the question and in this particular video he was using the "Arc(midpoint)method" But, i think the mistakes he made there was not writing the formula in full,"Which makes most people to be confused about the way he got the Average part" Well, the midpoint formula goes thus; {Q2-Q1÷(Q2+Q1/2)}÷{P2-P1÷(P2+P1/2} Everything multiply by 100 Using the first example in the video from A-B For quantity : {(4-2=2) ÷ (4+2/2= 3 which gives you the Average quantity)} i.e 2/3 × 100= 66.67% For price: {(8-9=-1) ÷ (8+9/2=8.5 which gives you the Average price)} I.e -1/8.5 ×100= -11.76% Therefore PED = 66.67 ÷ (-11.76)= -5.67✅ Do this for the remaining scenarios and you wil get the same answers. And for those of you probably still using Point formula; PED= {(Q2-Q1/Q1) ÷ (P2-P1/P1)} ×100 this formula isn't that acceptable in a Standard Economics Examination, bcs it can be prone to errors and it not as accurate as the Arc method.

[@wingbliss]

Thanks, you are the BEST! You make economics so easier to understand! Cheers.

[@kingpanda1]

Thanks so much for the help. You've literally saved thousands of kids haha! God bless to all!

[@sterling32157]

CooperKenison What he's calculating is called the arc elasticity, and he did it correctly. Basically it treats the whole line segment as the original value for the sake of finding the percent change.

[@Nolo777]

that little white thing you forgot to erase is killing me

[@alifanwer9518]

+Manuel Jimenez effects of OCD lol

[@aymanalam427]

Manuel Jimenez lol

[@erikabarcenas2]

this video really helped me, and was easy to follow ! THANK YOU !!!!!

[@barrel34]

I was taught this way (Q2-Q1/Q1)/(P2-P1/P1) where Q2-Q1 = Change in Q and P2-P1 = P. In the video he say's that we should divide both of the "changes" by the averages of the sums of what it was and what it is. hope I made sense? can anyone explain why is that?

[@hermionegranger4080]

It's not change in quantity, it's a change in quantity demanded.

[@laurenbarber8579]

a "unitless number", your word choices are revolutionary thank you

[@UnitedPebbles]

This is a sweet review for UCO's Business school.

[@김규민-t6o]

Mr. Khan as a Econ major your way of solving the problem could be little confusing and difficult. PED's Formula = (Q1-Q2/Q1) ÷ (P1-P2/P1) will be much easier to use. Ex) price of orange was $10 and it increased upto $15, Quantity demanded was originally 100orange and decreased to 80oranges what will be the PED? 0.1 is PED and its smaller than 1 so it will be (inelastic) hope this easy way of solving will help

[@humnaali5607]

But there is something with the negative sign. That's why he was using absolute elasticity

[@tsakanimidaka8309]

Thank you for the videos' you are a life saver, keep up the perfect job

[@sheirodney9264]

Thank the Lord I finally got it!

[@lavishlacquernails]

Thank you so much for the help!

[@claireandalice]

Your handwriting is so lovely.

[@rastadeniz8286]

THANK YOU!!!!

[@sherrys6460]

very colorful presentation, which helps a lot. nicely done!!!

[@sengkathirparri9311]

Thanks Khan Academy

[@Ag12x]

I finally understand it!

[@lucasgraboski1535]

Thank you!

[@simranwadhwani631]

U r a genius mann!!!!

[@sterling32157]

@dontchaworrychild He gives a pretty good answer to your question from 9:00 - 9:40

[@ScienceHelpWPS]

@NikaKasradze The find the percentage change in Quantity and PErcentage change in price, you must use: Difference/Average, or (Q2-Q1)/(Q1+Q2/2) Same for price. When you get those two quantities, you divide the Quantity % change by the Price % change to get Elasticity of Demand

[@MariaMaria-si4py]

Real Life is Big Different. Many business doesn't have to do a lot of step like this. The thinking is products, price, profit, loss, and plan. Any way we as human have a different way of doing and so ideas.

[@shaheerkhan6815]

i actually used this "Taking average" method for calculating "% quantity demanded" instead of the "divide by the first value" method...... and my teacher just straight up docked my grade for it...--___--

[@KaddyCeesay-pc1vc]

Thank you

[@barrel34]

@ScienceHelpWPS thanks mate, I told that to my teacher and he said he's going to think about it. He also told me that both ways are acceptable, but he admitted that this one is better! thanks again :)

[@frikhatomar6426]

Thanks a lot

[@kofi862]

keep up the good work Mr. Khan. nice work

[@dchall8]

I wonder how much more visually understandable this would have been if the graph was flipped into the conventional view where the independent variable (price) goes along the X axis and the dependent variable (burgers per hour) is along the Y axis.

[@bhargavrox]

I didn't get the average part. We weren't taught that in school

[@d3ltabrav0]

TI-85! Such nostalgia!

[@twinomujunisavias7322]

excellent content

[@arwanouira1558]

That was very helpful, thank you ❤

[@ScrappyDew22]

look at him using physics to explain economics... great example for an engineer moving to business!

[@selwynpaul5192]

very helpful

[@thereviewerisback]

I feel like this video should be 20 seconds longer. Anyways thank you for the help!

[@95dank]

Old number - new number. divide the outcome by the old number multiply what you get by 100

[@moitrig.9530]

thank you so much for making this so clear 😊

[@iamtheubermenscher]

i owe you my life.

[@sonubs520]

please put video based for icse syllabus all subjects

[@UnitedPebbles]

Elasticity of demand: change of quantity consumption compare to change of price. Repeat this three times and you get yourself a demo tape for audible.com.

[@sashaslove_1]

SO CONFUSED. This confused me way more than I was.

[@ttran8999]

Hi there just wondering .. what if I’m given the elasticity of supply and demand and there is an increase in production which increases the price to 2%… how do I find the percentage change in quantity? Any help is appreciated. Thank you and your life changing videos.

[@c0ntender1]

the way the you calculated is different from other teachers and also gives a different answer smh

[@headlessslayer5218]

c0ntender1 yup

[@RankaNikunj]

There are two ways of calculating PED( price elasticity of demand) 1) Arc elasticity 2) Point elasticity This this video, he did using arc elasticity, which uses averages in denominator.

[@kotoriacgll4449]

@@RankaNikunj but when to use the first one and the second one?

[@alveerasmystery357]

@@kotoriacgll4449 it would be given in the ques

[@venybzz]

Hey there my friend, thank you so much for your videos. They are really good for beginners to understand basic stuff. I want to ask about the the average formula you are using for elasticity. You explained that your are doing this in order to have the same result for A->B & B->A. But, doesn't matter that result is different number when you use the average formula and the "original" one? Or, is about elastic or inelastic and number doesn't really count. For example, from A->B E=2, so it is >1. Also, do you have any video for income elasticity? Thanks in advance

[@etho7351]

I feel like there is a better way to represent this equation

[@sannevanloon2601]

You have saved my life !!!

[@arjaymadriaga6608]

How about if there are 3 points that you need to calculate (something like point A-C or ABC). How is that? Thank you for responding ☺️.

[@SuperaMAYzin]

it's %change in quantity / % change in price, not the other way around.

[@lilcodec46]

May Phyo that’s what he did lol

[@BruchoSindicate]

How to find price if i know Demand and Supply? I am thinking for hours and can't figure it out..For Ex: Demand in units - 5400; Price - ???; Supply in units - 590? This is kind of a rocket science.

[@tonyyt408]

its nice. but there is one question i am misunderstanding. why should we use the %change in quantity over " the average of price" ? could someone explain it to me . thx much

[@5iveever236]

it's unitless, so the unit's end up cancelling out

[@Aa-xb6of]

Nice

[@Muso992]

Change in price. Change... Change in price. CHANGE in price. Change in PRICE.

[@fredwardNO1]

@xbsl123x I don't think you have made a mistake, that was what I was taught for A-level economics :)

[@AFROTHINKER]

I don't know if any one pointed that about but there is mistake on the graph. Price = x and Quantity = y. the graph has it backwards...... Hence % change in Q/% change in Price.

[@ensuena2]

that would make everything easier but unfortunately the variable is actually on the y axis, price, and quantity demanded is the x. Economics is weird....

[@gammaraycube]

between C and D formula i got -1.22% and not -1...which one is correct?..am bit confused..cheers.

[@fahadahmed3983]

i understand easily please

[@ahmetgokkaya8127]

if you remove the subtitle lock, I want to translate to turkish. pleas??

[@QuasiBelgium]

Watch out! We got a badass over here! (Quite a few, actually...)

[@rithvikchilam7232]

12:29

[@mj_genre007]

Hi! Can anyone tell me what's the equation? Thanks!

[@fahadahmed3983]

you added more videos

[@illicitlegacy3783]

So inverse of slope?

[@BenGenio]

When are these videos going to be uploaded on KhanAcademy? I want to earn Energy Points there, I have already watched the first 16 videos of the MicroEconomics playlist. Please, let us know! :)

[@bozzo296]

I need help please. If the price of a good increase from $6 to $8 leading to a fall in quantity demanded from 50 to 35 units what is the price elasticity of demand for the good at this price range? Explain what the calculated elasticity value means

[@Xlife018]

Im super lazy about doing math, but what I can tell you is that all you need to do is put the values in the formula after converting them to percentage and voila

[@SwagnSwag]

the price elasticity of demand for your question is -1.2. This means that the demand for this good or service is inelastic.

[@kathrynnjoki6609]

Which is the most elastic demand

[@fatffatable]

i love you!

[@tashannon1745]

please explain how the fuck the change from 2 to 4 is a %66 change..?

[@nakhoi1997]

+TAShannon1 yeah, wouldnt it be 100% change? I'm super confused

[@uPB4uTube]

+Nguyen Anh Khoi Once again, I am aware this was posted a month ago... but... Its done differently in economics than in regular math. The change in Q is 2, and so you divide 2 by the AVERAGE of the original Q and the new Q, in this case 2 was the original Q and 4 is the new Q, therefore it is 2 (The change in Q) divided by (The Original Q and new Q) (2+4)/2 = 3 Hence we get 2/3 = 66%. This way if we go backwards and go from Q4 to Q2 we still get a 66% change in Quantity. It removes the issue of percentages when raising/lowering a value. For eg, if someone said to raise the number 10 by 50%, it becomes 15, if someone said reduce the number 15 by 50%, you get 7.5, and so you can see that working backwards using regular maths percentages does not work for price elasticity. However if we use the average of 10 to 15 it will work both ways. This is quite a difficult park to explain however once you understand the concept it will make sense. Good luck!

[@baritmarkkennethb.9142]

What is the issue about in this video price elasticity of deman?

[@meeeeeeeeeeeeeeeee733]

I kinda don't get it. How could it possibly get the 8.5 as average??

[@brah8626]

9+8 devided by 2

[@loveonsalem]

@@brah8626why would he divide by 2? Tho? Wouldn’t it be 1

[@brah8626]

oh man i would really love to anwser ur question but i dropped of collage and literlly forgot every thing i took lol@@loveonsalem

[@foxdfive1]

what kind of software is this to draw out these problems. Looks like a blackboard with no hands

[@Theslboutiquellc]

So what is the midpoint formula

[@prosofinajerome6899]

what is price inelasticity of demand

[@CooperKenison]

just so everyone knows, %change in this video is calculated incorrectly. it should be (new value - original value)/original value. Just look at the change in quantity from 2 to 4: That is a 100% increase, not a 67% increase like Sal's method suggested.

What software are you using?

[@HaruTheGyaru]

Paint?

[@bryannguyen8440]

+Fernando Falcón Bamboo Brush.

[@bryannguyen8440]

+Haru NO

[@TheZakev]

I am confused. i used the formula (ΔQ/ΔP)*(P/Q) from the text book of David Besanko and got -9?Why? Where I'm wrong?

[@bryannguyen8440]

+Jm JM8 Really, WTF? He is certified you know.

[@AllAboutJailbreak]

I still don't understand it. I mean (ΔQ/ΔP)*(P/Q) or the thing he did, what is correct ?

[@madridista359]

Just a question to anyone.. im so confused, some please help, how do u just find the % change of price of % change of Qty, some say find the average while others say new number - old number / old number which is it???

[@ahmadawais4492]

where's the second video??

[@KoolKaiser]

almost all the videos i see are too basic, nothing like this will ever be asked on my exams...

[@thisisrtsthree9992]

+KoolKaiser yeah, but don't forget my friend that those videos are not designed to replace in depth books, articles, etc. These videos are great for contrast and context.

[@KoolKaiser]

ThisIsRTSThree999 to me theyre only really useful if u either dont go to class, dont learn in class or u studying online. I mean theyre very well done vids, just way too basic if ur actually in an institution and are serious about ur work

[@thisisrtsthree9992]

KoolKaiser yeah in that case it's better to get a book. Even tho there are books that are even more basic than these videos. Like, Mankiw's book, that book is sooo basic, it only has a handful of mathematics, everything is done with graphs without numbers.

[@KartingApexKing]

+KoolKaiser Why are you complaining. Purchase a text book instead, instead of complaining about a free video.

[@KoolKaiser]

Hamilton 47_ I wasnt complaining i was stating my opinion...furthermore if a textbook was a viable option at the time I would have used that.

[@Elusive0101]

channnge in price...change in price....channge in price

[@bddaawwgg]

Would derivatives work?

[@illicitlegacy3783]

Inverse i believe

[@lauraw3129]

When a free class online teaches better than my $10,000 schooling does....

[@riazkarim7047]

i want that scientific calculator software

[@k189644]

Fast forward to 5min and 30sec to save time

[@jacksoutofthebox]

Skip the first 3 minutes.

[@jacksoutofthebox]

*5:00

[@silviogrijalva8801]

Mason Smith nah

[@upamajety5143]

I am getting 5.55 as my answer using a different method.. Pls clarify