00:01
So here we're talking about the elasticity, and in particular, the elasticity of demand.
00:06
And first, let's remember that's the relationship between how quantity demanded changes with respect to price.
00:12
So when we talk about elasticity, we mean that if the price changes, how much will people change their quantity demanded? and the argument is that this elasticity, argument, which, and we normally call elasticity squiggly e or epsilon, is that the elasticity for coke is greater than the elasticity for soda in general, right, or for soft drinks in general.
00:45
Why might that be the case? well, let's try to think about where elasticity comes from, right? this comes from ability to.
00:53
To change behavior, right? so when price rises, elasticity is measuring, do people do other things? do they change their behavior or not? if you have no change, right? you are very inelastic, right? and you have a low elasticity.
01:20
You are not changing your behavior.
01:22
That's what low elasticity means.
01:24
But if you instead, instead have lots of change, you are very elastic, right? and epsilon is equal to high...