@pengok1995 So that we get the same elasticity whether we move from A to B or B to A. You can think of it as the "average" elasticity between points A and B. You are correct about how you would calculate percentages generally.
A1 loses and A2 wins. Keep it up Kahn. You're great. I'm learning more here than in my own university. They actually use your videos in some assignments. Pretty sad that I can come here and learn the same thing in a better way than what my university is teaching. Like I said, they even use your lectures in assignments. What the hell am I paying for? Roughly $18,000 for a piece of paper that says I learned your material.
It's because the %change from 1000 to 1050 is not the same as the %change from 1050 to 1000, but the %change from 1000 to 1025 is the same as the %change from 1050 to 1025 (i.e., ±2,4%). It's called "midpoint" or something like that.
@@sebbelito2975 We divide by the average because depending on the price going up or down by the same amount, we will get different percentage of change. For example, a price increase from $2 to $4 will see a 100% change. But a similar price decrease from $4 to $2 will see a 50% change. In order to counter this problem, we divide by the average. So now, by dividing the average, a price increase from $2 to $4 will see a 66% change and the price decrease from $4 to $2 will also see a 66% change. This is because now, you divide by the average for both increase and decrease in price. Hope this helps.
hey khanacademy, quick question so if you had perfect substitutes the CED would be infinity, that is, the CED of substitutes approaches infinity. My question is: "Does the CED of complements approach negative infinity as well?
your explanations are so good, it helps me a lot! but i wanna ask, what if the CED values is "undefined"? it is means that the goods are not related too? Thank you
wait so do we multiply them by 100 to get the percentages before we divide the numerator by demoninator or do we divide the decimals and then multiply by 100?
I'm trying to calculate the CED for an example given in class and any help would be much appreciated. We are comparing the complements of Tequila and salt. The original price of tequila is 10 and the quantity is 10. The price went up to 20 and the new demand is 5. The complement being salt had an original price of 2 dollars and the new price stayed at 2 dollars, but the quantity demanded of salt went from 3 to 1. The professor provided a CED of .7 Using your formula, I got -1.5 from the output values of P for tequila being .66 and the output of D for salt being -1 Help please
You have not given enough information to do a calculation. but if I may interject. Tequila saw a price change of 100%, you would need the % change of quantity in salt to finish the calculation, but lets say salt QD went from 10 to 4. That is about a 60% decline in salt's QD. so -60/100= -0.6. So we know 2 things. 1. the XED value is negative so the goods are complementary. 2. the XED value is less than 1, so they are not that closely related.
How would the equation look like using different customerbases, lets say that some people have a preference for e-books while some dont really like them. So effectively you have something like Q1A, Q2A, Q1B and Q2B.
But why do you say that if it is complimentary then it is negative? what if the change in the ereader was positive? then you are not going to have a negative result anyways! It's not always negative! and the substitute is not always positive! right? they can also cut their price and make it not 1050 but 950. then it would be negative? oh im confused sorry
According to formula = %change in quantity demand of good 1(A1)/ % change in the price of good 2(A2). But you have taken %change in price in good 1(A1) and %change in quantity of good 2(A2). it's confusing..
in your average on the airline1 you said 4.9.... what if you used 0.05 as the change in price will it be wrong or is it a must to change the round off decimal? i understood the vedio but thats my question please answer back.... thank you
Do I understand correctly @5:17 that a price increase of 1% in tickets for Airline 1 would lead to a 13.4% increase in the demand for tickets from Airline 2?
Yes. Crude oil and beef are independent goods, ie. the change in the price of beef will not affect the demand for crude oil. So the XED between the two goods would be zero.
there are three title under the cross elasticity of demand: substitude goods, complementary goods, and independent goods. I took two of them from this video but where is the indepentdent goods that last one?
question: how is the increase from 200 to 400, which is a 100% increase, become a 67% increase? getting rid of formula and just use logic and common sense
@pengok1995 So that we get the same elasticity whether we move from A to B or B to A. You can think of it as the "average" elasticity between points A and B. You are correct about how you would calculate percentages generally.
A1 loses and A2 wins. Keep it up Kahn. You're great. I'm learning more here than in my own university. They actually use your videos in some assignments. Pretty sad that I can come here and learn the same thing in a better way than what my university is teaching. Like I said, they even use your lectures in assignments. What the hell am I paying for? Roughly $18,000 for a piece of paper that says I learned your material.
facts
hope youre doing well now
your videos are the easiest to understand here on youtube. thank you. you are helping a lot o students with their exams including me
when this 11min video helps me understand my entire 2hr lecture, MiNdBlOwN!!!
you do this in uni?????
@@jeddslade3540 yeh boi
@@esthernaua country?
Why do you divide by the average, in class we divide by initial value
Ifkr
Same here! I am confused by the average...
It's because the %change from 1000 to 1050 is not the same as the %change from 1050 to 1000, but the %change from 1000 to 1025 is the same as the %change from 1050 to 1025 (i.e., ±2,4%).
It's called "midpoint" or something like that.
@@sebbelito2975 We divide by the average because depending on the price going up or down by the same amount, we will get different percentage of change. For example, a price increase from $2 to $4 will see a 100% change. But a similar price decrease from $4 to $2 will see a 50% change. In order to counter this problem, we divide by the average. So now, by dividing the average, a price increase from $2 to $4 will see a 66% change and the price decrease from $4 to $2 will also see a 66% change. This is because now, you divide by the average for both increase and decrease in price. Hope this helps.
Because, Here we are using the MID POINT METHOD. which is a better way to calculate percentage changes and elasticities.
clear ideas, nice and clear handwriting. I have to say that your videos are really helpful to first-year econ students.
Best treadmill work out videos, i discovered KA over 4 years ago when he only had a few videos
This channel is better than my prof.
Incredibly helpful video. Thank You
hey khanacademy,
quick question so if you had perfect substitutes the CED would be infinity, that is, the CED of substitutes approaches infinity. My question is: "Does the CED of complements approach negative infinity as well?
Thanks for explaining! Really grateful❤🙌
thank u very much, this video helps me a lot
Thank you!!! i learned more from you than in my school. :D
All your videos are really good and clear!!!! Thanks for your time...
Hey, keep the good work up!
Hey great videos! I was just wondering if you could do videos on factors that affect elasticity. For PED, PES and CED. Thanks, it'd help a lot (:
Perfect explanation❤
Good video, but since ebooks are nonrival goods why would people want more of them? I guess they'd want a bigger selection though.
Thank you!
Hey awesome video man! Thanks!
Thanks🙏
thank you
your explanations are so good, it helps me a lot! but i wanna ask, what if the CED values is "undefined"? it is means that the goods are not related too? Thank you
I thought the formula was % Change in Quantity of A Demanded/%Change in Price of B? It looks like he used the Q of B and P of A. I'm confused...
What courses do Khan Academy not cover?
does*
yoo "do" doğru
Health economics
Your mom
accounting, ethics, etc. lol
finding XED of Good x and Good y, then XED of Good x and Good z
correct me if I'm wrong. the percent change in price for airline 1 should be revisited. i think the percent change is 40% not 4.9%.
great video
wait so do we multiply them by 100 to get the percentages before we divide the numerator by demoninator or do we divide the decimals and then multiply by 100?
I'm trying to calculate the CED for an example given in class and any help would be much appreciated. We are comparing the complements of Tequila and salt. The original price of tequila is 10 and the quantity is 10. The price went up to 20 and the new demand is 5. The complement being salt had an original price of 2 dollars and the new price stayed at 2 dollars, but the quantity demanded of salt went from 3 to 1. The professor provided a CED of .7
Using your formula, I got -1.5 from the output values of P for tequila being .66 and the output of D for salt being -1
Help please
You have not given enough information to do a calculation. but if I may interject. Tequila saw a price change of 100%, you would need the % change of quantity in salt to finish the calculation, but lets say salt QD went from 10 to 4. That is about a 60% decline in salt's QD. so -60/100= -0.6. So we know 2 things. 1. the XED value is negative so the goods are complementary. 2. the XED value is less than 1, so they are not that closely related.
this is confusing
After 7 years, yeah it is
How would the equation look like using different customerbases, lets say that some people have a preference for e-books while some dont really like them. So effectively you have something like Q1A, Q2A, Q1B and Q2B.
nicely explained Sal
how do i find XED for the equation
Qdx = 10 + 0.06I -2Px -0.5Py + 0.7Pz
if Px=9 Py=4 Pz= 10 Income=$250.
I don't know
Hello, great video, I would love to know what software are you using as a board to write on?
great video!!
Getting specific, but the penny thing is a bit too insignificant
AMAZING VIDS btw, why do i even go to UNI???
@plamenxyzpenchev Cross Elasticity of Demand
But why do you say that if it is complimentary then it is negative? what if the change in the ereader was positive? then you are not going to have a negative result anyways! It's not always negative! and the substitute is not always positive! right? they can also cut their price and make it not 1050 but 950. then it would be negative? oh im confused sorry
where do you get the calculator??
Magic
According to formula = %change in quantity demand of good 1(A1)/ % change in the price of good 2(A2).
But you have taken %change in price in good 1(A1) and %change in quantity of good 2(A2). it's confusing..
in your average on the airline1 you said 4.9.... what if you used 0.05 as the change in price will it be wrong or is it a must to change the round off decimal? i understood the vedio but thats my question please answer back.... thank you
Do I understand correctly @5:17 that a price increase of 1% in tickets for Airline 1 would lead to a 13.4% increase in the demand for tickets from Airline 2?
Highest possible XED is 753 billion
love you
it is 0.49
why has 1025 been taken instead of 1050
Atharva Deshmukh because (initial value + final value)/2 so (1000+1050)/2= 1025
HowuDoin? Thank you
@@atharvadeshmukh2689 that's average
If we want to average 2 things we we devide with 2 or if we want to Average 3 things we divide by 3...
keep it up
why do you take the average isn't the percentage formula change over original multiplied by 100?
Is it possible to calculate cross elasticity of demand for crude oil and beef?
no bc they're not substitutes
Rihards yes, but you'll get zero CED because they're not substitutes or compliments.
Yes. Crude oil and beef are independent goods, ie. the change in the price of beef will not affect the demand for crude oil. So the XED between the two goods would be zero.
9:32 why 1050???
100/ 1050 Q
it should be (100/ (1100-1000)} right?
100/( (1000+1100) /2) = 100/1050
there are three title under the cross elasticity of demand: substitude goods, complementary goods, and independent goods. I took two of them from this video but where is the indepentdent goods that last one?
he gave the example of a basketball and an e-reader
I think my professor or teacher or whatever he was was attempting to over complicate this idea
I keep getting this mixed up with the Midpoint (Arc) method
where did you get the1025 from?
in between of 1000-1050
question: how is the increase from 200 to 400, which is a 100% increase, become a 67% increase? getting rid of formula and just use logic and common sense
How do I get that calculator?
Why is what im being taught in my economics 1000 course completely different from almost anything you talk about in these videos :/
That is because this video contains many errors and simplifications that lead to inaccuracy.
Sal's usually pretty spot on.. Perhaps the class covers another aspect of Economics?
He wrote it's 90 but it's 80
No you have to take the average. 100+80=180 then 180/2=90
so, the CED for substitue goods is perfectly elastic, CED for unrelated goods in perfectly inelastic? Someone please confirm this
Yes
This video sucks, why would you not use the unit neutral formula for elasticity
You lost me when u divided 50 to 1,025. Im stupid. Where on earth did u get 1,025 from??😭
Completely wrong
totally faltu lecture
its better to read book
he is like reading chapter
Sonu Paswan Bilkul sahi 👍👍
Not at all!! Lol
what the heck ?you are confusing me?
thank you