00:01
So here we're not talking about elasticity, and in particular the elasticity of demand.
00:06
The elasticity of demand measures how the quantity demand it reacts to changes in the price, right? so if there's a percentage change in the price, how much does the percentage change in quantity demand respond? so we need information about quantity and price.
00:21
So we're told that the percentage change in hot dogs is plus 5%.
00:26
We are also told that the hot dog quantity is going from 50 to 48.
00:34
And that has a midpoint of 49.
00:40
So the percentage change in quantity using the midpoint formula is equal to new minus old over midpoint.
00:51
And that is equal to minus two, that's the change over 49, which is equal to minus two, that's the change, over 49, is, again, that's going to require a calculator, is equal to minus 4 .08%.
01:08
Note that it's negative because it's going down, right? and that's what we should expect.
01:12
The price going up means that the quantity is going down.
01:15
So now i can plug into my elasticity of demand...