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Own-price Elasticity Formula by Justin Tapp

Own-price Elasticity Formula by Justin Tapp

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Author: Sophia Tutorial
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Calculate the own-price elasticity of a good.

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Tutorial

Video Chapters

(00:00 - 00:10) Intro
(00:11 - 00:32) Introducing Elasticity
(00:33 - 01:13) Arc Price Elasticity
(01:14 - 01:34) Own-Price Elasticity
(01:35 - 02:12) Using Elasticity
(02:13 - 04:46) Calculating Elasticity Using Midpoint Formula
(04:47 - 05:46) Interpreting Elasticity
(05:47 - 06:17) Review

Terms to Know
Arc Price Elasticity

Dividing the percent change in quantity by the percent change in price to analyze the relationship between the two economic variables.

Midpoint Formula

The middle point that represents the average of price and quantity when determining price elasticity.

Own-Price Elasticity

Elasticity of demand when the price of a good changes, keeping all other variables and goods separate.

Formulas to Know
Midpoint

m i d p o i n t equals fraction numerator open parentheses Q subscript A plus Q subscript B close parentheses over denominator 2 end fraction

Own-Price Elasticity

E equals fraction numerator bevelled fraction numerator open parentheses Q subscript A minus Q subscript B close parentheses over denominator open parentheses Q subscript A plus Q subscript B close parentheses end fraction over denominator bevelled fraction numerator open parentheses P subscript A minus P subscript B close parentheses over denominator open parentheses P subscript A plus P subscript B close parentheses end fraction end fraction