00:01
So if you're just here for the answer, the answer is elastic, but let me try to explain why for you, right? the definition of elasticity is the percentage change in quantity over the percentage change in price.
00:12
So when you say that this is equal to 1 .3, the first thing is that we should know there should be a negative here, right? but we usually leave out negative.
00:27
Why should there be a negative? well, because demand curves slope down, right? as, say, the price goes up, the quantity falls.
00:38
So these things are inversely related.
00:39
There should be a negative.
00:41
So what this means, for example, is if the prices went up by 10%, we should expect the quantity to go down by 13%.
00:52
So the quantity has a bigger reaction than price...