welcome back so we're gonna pick up right where we left off with example number two and so hopefully you did try it on your own if not don't worry about it so the first thing i'm gonna do is i'm gonna to take a peek at our uh our story here supposed at a price of 250 per gallon so that's my initial price p1 the quantity demanded from manny's gas station is 500 gallons so that's q one and a price of 350 per gallon p2 the quantity demanded falls to 450 gallons q2 okay so sort of a similar story as we had in example one price goes up quantity demanded falls so let's go ahead and calculate the elasticity okay all right so i'm going to i'm not going to rewrite the formula like i did last time hopefully you have it accessible to you um i'm just going to go straight to solving so we have q2 minus q1 so i'll write this as the percentage change in quantity sorry 450 minus 500 divided by the midpoint what's halfway between 450 and 500 well if you can't do that in your head do 450 plus 500 divided by two okay and then we're gonna multiply this whole thing by a hundred percent when we're done okay so 450 minus 500 is negative 50. 450 plus 500 that's 950 divided by 2 475 that's our halfway point okay i forgot to write multiply by 100 okay so negative 50 divide by 450 sorry divided by 475 is 0.105 negative 0.105 times 100 equals 10 and a half percent okay so 10 and a half percent drop in the quantity demanded let's see what happened to the price percentage change in price equals so we have 350 minus 250. hopefully you see the halfway between 350 and 250 is three bucks if not 350 plus 250 is six so divided by two is three multiply it by a hundred percent and so we get is one dollar divided by 350 plus 256 divided by 2 so it's three so you get sorry i did it again this last time in the upper two times 100 so you get .333 times 100 is equal to 33.3 okay last step elasticity of demand is equal to negative 10 and a half percent divided by 33.3 percent which is 10.5 divided by 33.3 is 0.315 and that is our answer that is our elasticity of demand okay so let's do what we did last time and think about what that answer means oh i forgot to put the negative man that's twice around um uh so what does this mean um so compare it to what we did last time last time the answer was two point uh i don't have it anyways two point something um and this is point three one five okay so the the difference is those numbers may seem close like point three and two are not that far away except for they cross that important threshold which is one why because what happens when this is less than one and it is right point zero is in magnitude less than one okay so it's a decimal you know magnitude means an absolute value in size um it means if we ignore the negative per second it's a smaller number okay obviously negative 0.315 is actually bigger than negative one but in magnitude and size of the of the number on the other side of the negative it's um it's smaller it's the decimal so what does that mean that means that our numerator is smaller than our denominator so in this case we had a 33.3 increase in the price and rather than having a big change in the quantity demanded it's smaller compared to the price that's what we mean by the numerator being smaller so as a result we have that the that same one dollar increase we have in both examples created a 50 drop in the the price of or the quantity demand of cereal then only a 10 drop and the quantity demanded of gas okay so this is going to be called inelastic demand because unlike the serial example it doesn't stretch as much people are more rigid about their their their purchasing for gas so that's why you only see a 10 drop with that big increase in price okay so that was example number two i'm actually going to stop this here because the next part has a sort of a lot of things going together so i'll see you for part three four i haven't decided whether example one is going to be its own video yet so probably probably part four