Elasticity Explained So Simply a Kid Could Get It | Lesson 3

Two shops raise their prices by 10%. The lemonade stand loses lots of customers, but the pharmacy hardly loses anyone. Why? In this lesson we answer that puzzle with a rubber band, a wooden stick, and a few easy calculations, step by step on the chalkboard. You'll learn: What elasticity means, and elastic vs inelastic demand How to calculate price elasticity of demand with percent changes The magic number 1: elastic, inelastic and unit elastic What makes demand elastic: substitutes, need or want, budget share, time Flat vs steep demand curves, and the two extreme cases Why some prices jump a lot when supply falls Elasticity and total revenue Price elasticity of supply Income elasticity (normal and inferior goods) and cross price elasticity Perfect for high school and first-year university students, or anyone who finds economics confusing. Chapters 0:00 Welcome 0:22 Two shops, one puzzle 0:50 What is elasticity? 1:19 Elastic demand 1:45 Inelastic demand 2:10 How do we measure it? 2:34 Let's calculate: lemonade 3:09 Let's calculate: medicine 3:31 The magic number: 1 4:07 What makes demand stretchy? 4:57 Flat or steep? 5:23 Two extremes 5:57 Why some prices jump 6:42 Elasticity and money 7:37 Elasticity of supply 8:15 Two more elasticities 9:05 Recap 9:55 Goodbye Previous lesson: Supply and Demand (Lesson 2) Next lesson: Production and Costs. #economics #elasticity #YouCanLearn