9.47- interpreting price elasticity of demand
TRANSCRIPT
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9.47- Interpreting Price Elasticity of Demand
9.47- Demonstrate an ability to calculate and interpret price elasticity of demand.
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Kickoff:❖ Go to Google Classroom and complete the
assignment “10/18- KO”➢ Explain why it is important for
producers to understand the Elasticity of Demand of the goods/services they produce.
❖ Sit in your same seats from the other day❖ Roll Call: One thing you couldn’t live
without
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Announcements:❖ 10/22- Concept check
➢ Not a formal grade!➢ Have module 48 read
❖ 90 minute classes and midterms next week❖ Heels play Va Tech tomorrow @ 3:30 in
Blacksburg
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Calculating Price Elasticity of Demand❖ Working with the person next to you❖ Some of these are DEFINITELY more difficult
than others❖ Work on the ones you can do easily first,
then work on the harder ones❖ If you finish early, read module 47 on
Google Classroom if you have no already
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9.47- Interpreting Price Elasticity of Demand
9.47- Demonstrate an ability to calculate and interpret price elasticity of demand.
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Inelastic, Elastic or Unit Elastic???❖ Elasticity = 1
➢ Unit Elastic- % change in Qd = % change in price
❖ Elasticity > 1➢ Relatively Elastic- % change in Qd > % change
in P➢ Change in price plays larger role in Qd
❖ Elasticity < 1➢ Relatively Inelastic- % change in P > % change
in Qd➢ Change in price doesn’t change Qd much
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Can you be Perfect? - Coach Gaines, Friday Night Lights❖ Perfectly Inelastic
➢ PED = 0➢ Price plays NO
effect on Qd❖ Perfectly Elastic
➢ PED = infinity➢ As price changes,
change in Qd is infinite
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Graph
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Total Revenues❖ Total Revenue = Price X Quantity
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Total Revenues- Test❖ Price increases
and TR increases➢ Demand is
Inelastic❖ Price increases
and TR decreases➢ Demand is
Elastic
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questions to determine Elasticity❖ Are (adequate) substitutes available?
➢ More substitutes = more elastic➢ Insulin, no close substitutes → inelastic➢ Toyota cars / Hondas → elastic
❖ Can we delay the purchase (time)?➢ More urgent need = more inelastic➢ Emergency medical care → inelastic
❖ Percentage of income➢ Larger percentage = more elastic➢ Salt prices increase by 40% → inelastic
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Back to Big Macs and Gasoline❖ Complete the worksheet on Big Mac and
gasoline elasticity and total revenues with your partner
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Closure
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Groups:1) Abisha, Parker, Michael, Ben2) Samhita, Brianna, Gavin, Ethan3) Jun, Sohum, Sophia, Lilianna4) Anna Grace, Rhea, David, Aneliese5) Deeksha, Sahith, Lanise, Shagnik6) Aayush, Aaron, Claire, Raghav7) Anshul, Claudio, Murphy, Gerald8) Olivia, John, Diya, Axel