00:01
So here we're talking elasticity and in particular elasticity of demand.
00:05
And this is a technical term, so you simply need to know what the formula is, right? the definition is the percentage change in quantity relative to the percentage change in price.
00:15
So you need information, which we've been provided, about the two inputs, right? quantity and price, i always like to put them top and bottom to make sure i don't get them mixed up.
00:27
The original price was 3 .5, the original quantity was 4 ,000, and these prices changed to 2 .5 and 5 ,000.
00:38
Now we also traditionally do percentage changes in elasticity with respect to midpoints.
00:47
Now this is a sort of technical thing that is basically trying to make the percentage change reference neutral, right? if you're going from a to b or b to a, we want the elasticity to be the same.
00:59
The way we do that is make a midpoint percentage change.
01:01
A midpoint percentage change is equal not to new minus old over old, but new minus old over midpoint...