00:01
Okay, so here we're talking about price elasticity.
00:03
Let's remember what that means, right? price elasticity is equal to the percent change in q over the percent change in p.
00:13
And really, it's the quantity demanded.
00:15
So when we're talking about higher elasticity, we mean this is bigger, right? the top of the fraction has to be larger for the higher elasticity.
00:30
So we're thinking about which one can react more, right? more reaction.
00:37
When the price changes on the consumer, which of these goods is going to be more reactive? and my answer here, right, the answer here is the sports car.
00:51
And the determinant of elasticity here is the necessity of it.
00:58
Or sometimes what you might call the degree.
01:01
Degree of substitutability.
01:04
So that is a phrase only an economist could love...