Відео

Thanks for the question. Income and leisure are not perfect substitutes but how you incorporate microeconomic behaviour into macroeconomic models is an important issue. I’m not sure what the modern thinking is because I’ve been retired for 9 years so it’s worth having a chat with your macro lecturer about this. If you’re interested in this area I always used to tell students to read Micromotives and Macrobehaviorby Thomas Schelling. An old book but very thought provoking.

Merely because it makes the comparison with the monopoly diagram easier. Students are usually more familiar with a monopoly diagram rather than reaction curves and I find it gives a neat way to observe the welfare differences between monopoly, perfect competition and Cournot oligopoly which is a non-price competition approach. Of course, it is possible to change the model to introduce fixed costs as well as differences in costs between firms in oligopoly models and I did do this when I was teaching. Anyway I hope you enjoy your studies of economics and keep asking questions like the one you did.

Hope you found it informative. As for your comment I have always said to my students that my videos are helpful for those having difficulty getting to sleep at night and should not be listened to while driving or operating heavy machinery. Show less

I checked the video again and it seemed okay.

Hi Kevin, Thank you for your response. Could you inform me was my method correct, I did get an answer of 0.212. So with a 1% increase in price, this therefore means there is only a 21% change in quantity demanded?

Thanks. Glad you found it informative. As for your last comment I have always said to my students that my videos are helpful for those having difficulty getting to sleep at night and should not be listened to while driving or operating heavy machinery.

Kevin Hinde 😂 goat response

If you use the formula for price elasticity [(dQ/dP) times (P/Q)] you can calculate point elasticity at every point along the demand curve. dQ/dP reads the change in quantity demanded divided by the change in price or the slope of the inverse demand curve drawn and P and Q represent the base quantities. The slope of the inverse demand curve is constant for a linear (i.e. straight line) demand curve and you can find this here by looking at the distance from 0 to point G for the change in quantity and from 0 to point A for the change in price. So the change in quantity demanded is 6 and the change in price is 6, so the slope is 1 (technically, the slope is minus 1 because as price rises, quantity falls and vice versa but there is a convention to ignore the minus sign so that we avoid confusion handling negative numbers). If we know the slope is always 1 then it possible to calculate each point along the demand curve. So, at B, where P = 5 and Q= 1, the formula gives a number of 5 (i.e. 1 times 5/1), which is the value given in the slide. The other elasticity values are A = infinity, C = 2, D = 1, E = 0.5, F = 0.2 and G = 0. Remember, of course, that the numbers have to be translated into words. So, for example, at B a 1% change (rise/fall) in price leads to a 5% change (fall/rise) in Quantity demanded. Hope this helps. Good luck with your studies

Nobody seems to know what Point Elasticity is for. All educators just use Point Elasticity to illustrate that moving in opposite directions along a curve gives different answers, and that you should use the Midpoint Method instead. However, the relevance of the simpler Point method just seems lost as a result, especially since you're still expected to observe a change, meaning that you never stick at one point anyway. Economists just ignore you when you ask them when Point Elasticity is ACTUALLY used.

ditto

better than someone else who takes one year to figure out this problem.

actual facts... uni is the biggest ripoff ever existed. pretty sad that you can't do much without it nowadays but oh well...