00:01
So here we're talking elasticity, and in particular, we're talking about income elasticity, right? and the definition for that is how the change in quantity compares to the change in income, right? when your income goes up, do you buy more, do you buy less? do you buy a lot more? do you buy a lot less? so we need information on quantity and income, right? the first thing we know is that this person is going from 20 to 19 in terms of, quantity and in terms of income they are going from 37 ,000 to 30 ,000.
00:37
We're also going to need midpoints here, right? we are being asked to do this using the midpoint method.
00:44
So the midpoints are going to be 19 .5 and 33 ,500.
00:50
Now all we need to do is plug into our formula, right? this is equal to right the new minus the old over the midpoint.
01:01
For each percentage change, right, we are plugging that in.
01:05
So for quantity, we get 19 minus 20, all over 19 .5.
01:14
Now we take the percentage change of income, which is 30 ,000 minus 37 ,000, all over 33 ,500.
01:29
That's a little bit of a mess, but it simplifies without too, too much difficult...