00:01
Here we have some products that's an elasticity of 0 .5, and this question is asking us to find what happens to the quantity when we have a 3 % increase or decrease in price.
00:10
So we already have the equation for elasticity up there in red, and luckily, since we have 3 % increase in price and on a dollar amount, we already have delta p over p.
00:21
And we're looking for delta q over q.
00:25
So we can just use that equation and delta q over q negative e and e0 .5.
00:31
We know from the problem.
00:33
And then an increase in price of 3%, we're just going to put that in as 3%.
00:39
And then when you multiply 0 .5 and 3, we get a negative 1 .5%.
00:45
So this means that we have a 1 .5 % decrease in our demand because we have a negative 1 .5, which means decrease.
01:00
Conversely, if we have a 3 % decrease in price, not much is going to change, but it is still going to make a difference...