wasted money on cures forgot how to fix myself they say that time is free then why is it so precious oh I'll say memories in my head like polo ro on walls they remind you to look ahead time is running [Music] out time is running out [Music] lately I've lost my track my track i've sailed the deepest seas deep hoping I find something to bring back better times oh I'll save me in my head like polar o they remind you to look ahead but time is running out time is running out time is running out time is running out time is running out time is running out time is running time is running [Music] out time is running [Music] out oh what if my best days are over they can't be over [Music] they can't be [Music] over time is running out what if my best over you got me [Music] over yeah yeah time is running [Music] time is running out [Music] morning everyone it's 11 o'clock on Wednesday so we're here for the first session we've got six haven't we six sixg six global business live streams in the next 48 hours and the first one is uh as you may have guessed from that thumbnail on the introductory video there a deep dive uh have you been spending a lot of time revising G or coming up with diving puns um I've spent at the time uh well I have been diving into a few uh few topics and then yeah just Yeah yeah hopefully we'll make a splash oh that's better so welcome everyone so the idea of the deep dive is to is just to pick one specific topic area in this case income and price elicity demand which we know from our experience is fundamental to success at a level business across all exam boards and just really specialize in that topic area for 30 35 minutes or so so you're more than welcome to join us thanks for thanks for doing so quick reminder that we are in two weeks time we are live aren't we two weeks today I think we are two weeks live at Yeah it is two weeks isn't it tuesday isn't it start on a Tuesday yeah so it's not two weeks today it's two weeks yesterday so we're over at Westfield Stratford for uh two days of Grade Booster aqa on a Tuesday EdXL on a Wednesday still a few places left but it's going to be a busy one that one and then hopping over to West London to White City for the last two days of grade Booster so if you're attending if you can join us uh come and say hello we really enjoy those days it's a couple of weeks before the exam so they will be great if you want to take a day away from uh your normal place of study and just focus lock in on A level business jeep that's the word isn't it that is the word we're the ones in the deep sea divers costumes by the way presenting at the front okay let's make a start then G so we're going to do a big reveal whilst people are joining us we've got just short ofund and just short of 200 people live now so do you want to take us through this one okay so we got a business here and it's under hidden under the question mark under each number is a clue for that business as soon as you uh think you know the business type in the chat window so this was founded in Southampton in 1969 so if you think I know a business that was founded in 1969 but was it was founded in Sunderland for example it's not this business this was Southampton this is uh for NXL and AQA students any other any any exam board really yeah educas yeah all good it's common to all a level yeah well we've managed to get to three and four stores so if you're thinking of a business only has 303 stores it's not that one is it it's not definitely not so clue number three owned by Kingfisher plc oh we got little uh Wow some people got BQ already amazing i think it is already i think was first so once once again we've not get not got to clue four i know orange logo and aprons uh founders were Richard Block and David Quail hence the name BNQ and uh being Q do you want to know an interesting story about BQ jim you didn't you used to work there i worked there i was the store manager there for many years before I I retrained to be a teacher yeah i worked BQ was that was that the interesting story that was it that was it that was it or two people in the live chat suggesting that chat GTP or Google was being used as those clues were were um revealed but that's not how that's not how it rolls with this with this team is it no not really you're only cheating yourself if you do that really should we start with some MCQs here we go so as I say this focus this session is uh purely focused on ped and yed price and income to demand we've got some MCQs couple of calcs some application spinners a couple of mini cases we've got the lot so here's the first one and it's always worth knowing the formula the formula to calculate PE price elasticity demand it's one of those four it's either A B C or D so read those through carefully it's obviously some kind of relationship between price and quantity demanded but what is the right formula have a go got to know the formula even AQA students who aren't required to calculate the coefficient it's absolutely vital you know the formula to understand what's what's happening and it's a good start i I we were just saying weren't we g as the as the live stream started that just looking at the the people joining us today a top a top team today of of of students lots of people who've been with us for several sessions it is indeed a it's percentage change in quantity demanded by the percentage change in price so the peed coefficient it measures the sensitivity of demand to a change in this case in price so we must have quantity demanded on the top good start here's our Second one G okay so a product has a y of minus2 if incomes increase by 5% what will happen to the quantity demanded will increase by 10% fall by 10% increase by 2% fall by 2% so what do we think that is it will increase by 10% fall by 10% increase by 2% fall by 2% lots of students going for A and B so so far we're split between the two yeah let's keep them coming in so an important uh piece of knowledge and understanding is to understand what that coefficient actually means so the majority going for B these one or two A is kicking around yeah mainly B though do you have mainly B mainly B the answer is of course it is B fall by 10% that because that tells us that minus figure we don't ignore the minus with Y it tells us that's an inferior good so when income's increased the quantity demanded falls the number two means that for every 1% increase in income the quantity demanded will fall by 2% so five times of two is 10% yeah it will fall by 10% now at this stage you normally mention the immortal words Brumwells tomato ketchup now you brumwells tomato ketchup so as incomes rise maybe consumers switch from buying Bumwells or Bramwells tomato ketchup which I think is in Aldi to maybe other brands of tomato ketchup such as Hines maybe maybe the switch as their incomes rise maybe the move towards normal goods rather than inferior so on brand baked beans moving to Hines things like that got it okay so uh now this is a tricky one this is a tricky question do you want to see this one yeah yeah yeah I'll do this one so product product X has a PE I hope it's right product X has a PE minus of minus2 after decreasing the price of the product the quantity demanded increased from 250 units per week to 270 units per week but what was the percentage decrease in price you got this yeah yeah so so the quantity demanded went increased by 250 units to 270 units what was the percentage decrease in price no it worked out that the percentage uh increase in No it's right i think it's right i think the percentage increase in demanded is 8% isn't it it's gone up by 20 isn't it yeah I think ahead of two so I think we're split between A and D i think some students have uh have just not fully read the question and worked out the percentage increase in quantity demanded only which would result in students thinking the answer is A when it is of course yeah it is four yeah D it is D so if we look at that the uh quantity demand is increased by 8% that's a difference divided by the original times 100 so the difference of 250 270 yeah and then uh so we know if the quantity demand increases by 8% and the ped was minus two or two we just reverse that so we divide it so therefore the percentage decrease in price must be 4% and we can work that out if by dividing you know 8 by fourus so that that increase of 20 units I worked out as an 8% increase in quantity demanded and um that must mean that the ped is is minus two so for every increase of 1% it would the quantity would would have increased by 2% definitely um but increased by eight so it must be four but we'll keep going through those Danielle and others who are a little bit confused sophie and one others in the live chat we're going to keep going through these got some calculations so this this is why it's worth doing these deep dives g which one of the following products is most likely to have a positive income elasticity coefficient or y of greater than one so plus one or more one of those four is it a Snickers bar is it a meal in Pizza Hut is it an Indicit washing machine or an Aston Martin car the most likely to have a positive yet of more than one what do we think oliver says Aston Martin cam says Aston Martin as the car is a luxury good henry and Tani and Orlando all agreeing with that um am says Max which I think is short for Aston Martin jt Galaxy is giving us the reason here it is Aston Martin isn't it it is Aston Martin so the reason for that is because luxury goods definitely have a a positive Yed of more than one in other words as incomes rise quantity demanded will rise by more than the percentage increase in income okay exactly so luxury goods are the much much much the most likely to have a positive income of more than one the others are the others are just normal goods aren't you so you know you know if you earn more money you may have you know you may go for a meal and pizza but not to the extent you would if it was a luxury the fact that it's branded uh pro possibly means that the uh well probably quantity demanded will increase as incomes rise but probably not more than one yeah but uh Aston Martin is uh the correct answer well done uh oh we got one more G then we'll move move on to our calculation all right so we got product zed you know we're really pulling out all the stops with the names of these products aren't we product zed has a and that that rhymes i'm a poor and I don't even know it product zed has a plus 0.5 after incomes increased by 10% the quantity demanded of product zed increased from 15,000 units per week to is it A B C or D and I'll just work this out myself let's have a look so income's gone up by 10% but quantity demanded won't go up by as much as that will it no because it's 0.5 but it will go up because it's positive it will go up it will go up but by what extent is what we're after so we need to uh use a coefficient we're really hammering this because uh it's an area that students often find it's going to be a weak weak area can't it of understanding what that coefficient means we have done a lot on this i'm with Georgia and Ria I think and um number of others elizabeth Jacob all going for the same answer as me it is 15,550 units because if uh income's increased by 10% the get is 0.5 so that means so there's a I think there's a lot of confusion around and this is really really um uh the coefficient is for ed XL not for AQA right I'm I'm not sure what that means no both AQA and XL students need to be able to apply the coefficient yeah yeah only Ed XL need to calculate the coefficient yeah yeah yeah yeah but you still need to understand what that coefficient means so let's just let's just take a little bit more time on this yeah so that coefficient tells us for every 1% increase in income the quantity demanded will increase by 0.5% that's what it's telling us for every 1% increase in income the quantity demanded will increase by 0.5% because incomes are increasing by 10% that means the quantity demanded will increase by 5% that's because we multiply the 10 by the 0.5 so if 10% increase in income will leave lead to a 5% increase in the quantity demanded we therefore need to increase the 15,000 units by 5% i just multiplied 15,000 by 1.05 to get 15,750 units it is really really important that you have an understanding of the coefficient it is really important definitely and but the fact that it's a positive u y means that quantity demanding will increase as incomes increase that's not why but it's not a luxury good is it it's only by 0.5 exactly it's just just Yeah it's a normal good just I'll stick Rose's question on here because it's a relevant one isn't it as we go through calculations and stuff so for PED you do but you don't for Yeah you don't fored it's important for Yed because the minus tells us it's an inferior good so when incomes rise the quantity demanded will fall uh whereas if it's if it's a normal good when incomes rise the quantity demanded will increase for PE it's always a minus because it's always an inverse relationship if you put the price up the quantity demanded will fall uh so will always be a minus we're just concerned about the extent of the fall when it comes to PED that is why for Yed the plus and the minus are really really important yeah okay should we do a calculation then we've talked about um calculating the coefficient and obviously for equations students you don't need to calculate the coefficient but our view Gar's view is that you really need to understand it and the best way to understand it is to practice calculating it um so uh what we would you would you believe it we've got a yet another business that's close to Eugene Sunland yeah yes sunland is the is is the is a commercial capital of the world isn't it so here we go so that's vinyl a record shop and uh they reduced the price of their records from 25 to23 so there's a percentage change in price there that we may need to calculate well need to calculate consequence of reducing the price the number of records or quantity demanded sold increased from 150 to 168 so with that in mind remembering that formula that we looked at right at the start calculate the ped the price elastity demand coefficient we've got a minute for this here we go i'm doing it again myself can't practice these even when you know you can't do too much practice you can't and hopefully this activity will set the record straight when it comes to being able to work out work music to my ears people tuning into this who haven't met us before G thinking this is actually standup that's that's actually disguised as a level business we are both sitting down so no we're sitting down we're we're sit we're sit down comedians not stand up well you are um do you know what very very quick working out remember AQA students you will never be asked to calculate this we just think it's it's it's it's useful to know because if you know how to calculate it your understanding of the coefficient will be a lot will be a lot higher yep it's great to see people putting uh calculations and workings in the in the live chat jt one of many who actually gave us the the two percentage changes there jt was reckoning it was a 12% uh increase in quantity demanded from 150 to 1680 you divide that by the percentage change in price the price has fallen by two pounds hasn't it which is 8% therefore PE is minus 1.5 according to JT i think that's probably right isn't it lots of other people in the live chat saying that should we have a look at the answer yeah yeah there it is yeah it is yeah it is and and and what Yeah and what that tells us is that it tells us that that that the the demand for records in Sunderland is price elastic because is greater than one that means the percentage change in quantity demanded will be greater than the percentage change in price and we can say that can't we we can say that because as we've altered the price by 8% the quantity demand has changed by 12 which is greater than the 8% so um so that is price elastic so what we'd be advising this business to do would be is to try and reduce the price of the records because the increase in quantity demanded will be greater than Yeah yeah yeah you know the uh the percentage decrease in price is this the hardest question you get it's difficult that Orlando because this is just a standard calculation question you may get asked to interpret the coefficients and what might happen to revenue um and we're going to do some of those activities on this live stream here we are yeah excellent well done good start people are working really hard on this session which is great to see should we do a quick application spinner so it's not all it's not all uh calculations it's about how to apply so in this case what have we got here G six businesses but we're looking at PED and how to maximize sales yeah so how might the following use PED so um so I answer we look at some of the strengths and weaknesses so this is this ties in with that so what is the strength of PE this is how a business might actually use it so how might the following business use ped to maximize its sales revenue let's see if um or what comes up Tesco whatever little helps so how would Tesco maybe use Ped to maximize its sales revenue just picking up on Max's uh Max Britain's point there for XL it did come up as an eight marker on a paper three once um from memory um the uh ped or yeah I can't remember which one it was but it was definitely more than a four marker so how would we use ped or how would Tesco use ped to maximize its sales revenue so remember some products uh business to sell maybe price elastic or price inelastic so price inelastic is where the percentage change in quantity demanded will be lower than the percentage change in price um and price elastic is the opposite of that so we've got just a seal may aim to lower its prices as its goods are likely elastic can we put just a seal's answer on there i just want to pick up on something there yeah let's put that on yeah so so so I mean it's some it's there's some knowledge and understanding i'm just trying to avoid using words like it's likely elastic be specific are likely to be price elastic so just try and tighten the language up then and you know maybe some of the products Tesco sells are price elastic maybe some aren't maybe they have a mix of products yeah oh bound to be aren't they bound to be yeah yeah can I put If we put Chloe's point up there I'm just trying there's so many coming through so forgive me so the strength for Tesco is it can drop the prices of again try and use PL price elastic rather than elastic goods yeah such as Tesco branded bread so we've got some great such as seasoning there which is really really well done Chloe so I think you've recognized that maybe some of Tesco's products are price elastic such as Tesco bread so by reducing the price of that sale by 5% the quantity demanded will increase by more than 5% therefore increasing sales revenue so that's how we would use contextualized analysis there there may be some products that Tesco sells that are price inelastic you know maybe some of the luxury wines and spirits or some of the cheeses to sell or some of the you know the you know the taste of difference meals or that type of things to sell maybe are price inelastic let's take on here so we've gone we've gone with an inelastic example there absolutely you know that is that's really good if they are price if they are price inelastic increasing the prices that will mean yes the quantity demanded will fall but by less than a percentage increase in price increasing sales revenue people should we put our suggested answer on the screen here let's have a look at this one yeah yeah so Tesco could use pet to set some the price of some of its grocery in the house or household item for example if Tesco estimate that its own brand washing powder is price elastic it could reduce the price to increase sales as a percentage increase in quantity demanded would be greater than the percentage decrease in price i think I think some a weakness of ped is again a lot of it on estimates isn't it you get a feel you get a feel for a product elasticity of demand but you can never really be sure there's lots of factors that influence it as well great and also with with particularly with two parks that Tesco's they're constantly offering price matching aren't they in other words they know that for most household items the the Billy Basics that there's there's a comparison with old in little therefore demand is very price sensitive so that's why PED is so vital to them they've got to get the prices right haven't they exactly just to say there so so if if if the coefficient is less than one so 0.9 0.8 8 or whatever uh we would class that as price inelastic it was greater than one then it would be price elastic yeah if it's more than one uh demand is is very sensitive to changes in price quantum demand will change by more than the change in price yeah if you look at a good like if you look at a good like say like petrol for example petrol is relatively price inelastic because if you put the price up yes maybe people will make fewer car journeys but still people still often have to make car journeys therefore we would class as price inelastic yeah well we're going to keep going these with de as I say we are diving into um P and Yed so over to over to you in the live chat we'll give you a minute to let's think about what factors do influence that that responsiveness that sensitivity of demand to changes in price can you give us three or one or two different factors that affect Ped over to you uh are you on the bongos on this one G or should I play the uh I'm on the uh bongos do you know I got hit on the head with a set of bongos you know Jim right mild percussion brand loyalty brand loyalty amount of substitute some great answers coming up here uh yeah that could affect the price elasticity of demand addiction is a really good one yeah uh you know addiction and addiction has many forms it could be you know certain products it could be you know addicted to phones and things like that but that could have Yeah affect the elasticity of demand price elasticity oh I like the splash acronym there michael's splash yeah yes yeah and he's given us more than three which is impressive i thought I thought it said splash there but I've reread it as these glasses these glasses were very price elastic um uh sub substitutes with branding loyalty percentage of income obviously I think elasticity demand but also impact on price time frame and habit forming yeah really good really good point set really good this is going for a time period um the substitutes is a really important one isn't it what what else would you buy if the price if the price changed and brand loyalty is perhaps the best way to think about products that are maybe price inelastic yeah yeah like if the price of a Coca-Cola goes up probably wouldn't switch to one brand i probably still buy it some people would switch but it's the extent of the switch isn't it yes so we've got the same very same things availability of substitutes degree of necessity how necessary something is uh brand strength you know degree of necessity can mean many things it could be petrol it could be bread could be you know butter things like that what what people perceive as a necessity as well is also important um brand strength's a good one necessity I always take to being stuff you can't do without um so Wi-Fi for example well yeah and again that's all relative that's all relative isn't it it's what what people are prepared to to uh Yeah do without awesome stuff yeah yeah so Rose Williams there yeah what was an example of habit forming is Yeah could be cigarettes could be that you know it could be something you know that they they want want to give up there was no doubt the the the thing was is demand will always fall when the price rises it's the extent of it that that's what we're after that's what price elasticity demand is concerned with should we do another little uh calculation i think we got a couple of calculations haven't we so let's let's go through these yeah uh Caris we'll just come back onto that uh if we make another what we mean by substitutes we'll just come yeah so we got a busy we've got Bread Pit which is a bakery located in uh County Durham after locals uh after local incomes increased by 5% the owner noticed that the quantity demanded for their specialty sourdough bread increased from 60 units per week to 66 units per week can we calculate the income elasticity of demand for the sourdough bread here we go what is it so we have to remember the formula don't we so this is income elasticity demand or y so that must be the percentage change in quantity demanded i'm going to just percentage change in income so a couple more percentage changes to work out from that data and then we do need to think about the plus or the minus here because Yeah yeah yeah we really need that yeah yeah so in your in the live chat if you're putting the answers in Henry there's only need to put it in once um and you need to put it in again it needs to be either plus or minus yeah if we could put the plus or minus on that will allow us to ascertain your true understanding of the concept the other point is it's not a percentage it's a coefficient so again don't uh yeah don't put percentage don't put a percentage sign after your number it's a it's a ratio isn't it a coefficient is the technical term yeah yeah yeah it's not percentage lots of people getting the calculation correct which is good to see jastic Will's Will's his workings on the screen there G yeah and uh yeah great stuff there can we put um Oh Louis 1466 on there uh answer as well there please if we 1466 Louie 1466 uh so Louis Lou asking "Have we found it?" Louis asking "How do you know if it's a plus or minus?" So uh so basically if if incomes rise and the quantity demanded rises that's a plus because that tells us when incomes rise you know they both increase so that's a plus if incomes rise and the quantity demanded falls that's a minus that tells us it's an inferior good and vice versa if incomes fall and the quantity demanded increases that's also an inferior goods that's also a minus but the way to tell is really if incomes rise and the quantity demanded rises that's a plus that's that's like that's what a normal good should do it should rise as incomes rise that's why it's called sourdough bread which should also rise but it is but it is it is a luxury good isn't it it is katie is asking a good question in the live chat is it always quantity over price or income yes yes basically yeah ped is quantity over price y is quantity over income and the percentage changes yeah are you still chuckling about that sourdough oh yeah yeah yeah you're going to have to you're going to have to take you're going to have to take over the calculation because I've gone well I don't need to because in the live chat I mean just sensational quality of answers here uh and it's it's a big relief that we've also remembered to put plus in front of the two 2.0 because well done it's uh income as incomes rise quantity demand has increased uh for bread pit sour there it is plus two so we know it's a luxury product plus yes it's it's it's gone up but the but the coefficient is greater than the percentage change in income so therefore it's a it's a luxury good just put Janette's workings on the screen as well a nice summary of that is the percentage change in quantity demanded it's gone up by 10% divided by the percentage change in income it's gone up by 5% so it's plus plus two we're really doing well on these which is encouraging um let's do one more calculation this is a bit harder G yeah and I think it's I think it's worth doing this it's okay working out the um it's okay working out the coefficients things but we need to apply the coefficient so how how does it actually affect revenue so we got a takeaway here in York called Titanic the takeaway sells on average 200 of the chef's special per week priced at £10 i'm making a note of this so the chef special is £10 the owner of the restaurant estimates that the income elasticity of demand yet for the chef special is plus 0.5 what would happen to the sales revenue of the chef special based on an 8% increase in income so if income's increased by 8% what would happen to the revenue of the chef special that's the bottom bit isn't it the 8% increase that's the bottom bit of the of the year yeah so if you think at the minute it's two it's £2,000 a week the chef special that's what they're making sell 200 a week the price is £10 that's what they're selling at the minute what will happen if it increases by 8% let's have a go okay uh start the clock even yeah so I've just had a quick workout of the percentage differences there so okay so what do we think so it's positive so income's going up by uh going up by% and the y is also positive so the quantity demanded should also rise shouldn't it as incomes go up but not by as much as 8% if I'm reading that plus 0.5 right yeah yeah i have some great answers coming through here remember put signs on and it's currently 200 so to say what will it go to from 200 times the selling price is the same isn't it yeah the chef special chef special at the Titanic always goes down well I bet it does so not an easy question cuz to get this you've got to apply the coefficient you got to apply the coefficient you got to increase the revenue so some sensational work going on here it really is impressive really good brilliant i'll stick I'll stick re amongst others lots of people but rear was one of the one of the many who put the uh sort of the working worked out that the quantity demanded will increase by 4% because it's going to be half of the percentage increase in income because they went yet is only 0.5 and then you've worked out that that is going to be um 208 isn't it okay so um so this there is some before we the answer so it is it is some confusion so it's you know that's why we're doing these we've got a lot of time let's just go through it so but how do you apply the formula i don't have a how are you applying it i'm not sure so okay the co the coefficient tells us again that for every 1% increase in income the quantity demanded of the chef special will increase by 0.5% that's what that 0.5 tells us so for every 1% increase in income the quantity demanded of the chef special will increase by 0.5 but it's estimated that incomes are going to increase by 8% so to find out the percentage increase in quantity demanded we multiply the eight by the 0.5 yeah so that's 4% so if incomes increase by 8% the quantity demanded will increase by 4% so therefore all we need to do is increase the number of chef specials by 4% and then multiply that by the price of £10 and if we reveal the answer that's the steps we've gone through so so really if income's increased by 8% it's estimated that the the um they will sell 28 chef specials and because the price is £10 that will result in revenue of 2080 now remember remember this is all very well saying that's what will happen but the a business has to plan for this has it got the resources to make that number of chef specials you know can it satisfy demand um yeah so Rodrigo there if it was just one yeah it would just be it would just be like for like it it would never be one in an exam it would always be lower than you know it would you know it would never work that way really but um but yeah that that's correct so that's how we work it out step by step and that's how that that's the application of um Yed and the same applies for PED as well that's how you apply it in a situation yep that's it really strong work this morning i'm I'm impressed because I think this is one of the trickiest areas which is why we keep coming back to it again and again because we know we know it makes a difference so well we've done three factors influencing ped what about income elasticity demand we've just looked at the rising the growth of um the inflation of sourdough factors please influencing income elasticity demand what do we think 30 seconds obviously a change in income is a factor but that's in many ways that's um it's the sensitivity of demand to a change in income doesn't it [Music] this you often get questions on the fact this can influence uh pen yet yeah some great answers should we reveal what we had okay yeah lots of answers coming in the live chat keep an eye on that so obviously you know the the type of product so whether it's normal necessity luxury or inferior will will will influence the income elastics demand so if it's luxury it'll be you know greater than one if it's inferior it will be minus whether income's about to change that's quite interesting so if incomes are forecast to fall or increase that will affect you know how income elastic you know a product can be and the strength of the brand as well also affects the income elasticity of demand you know uh when incomes rise people maybe switch to a more branded product from an inferior product so they are just some of the factors that influence income elasticity of demand quite a few people in the live chat have given us factors influencing incomes rather than income elasticity demand so factors such as the state of the economy level of unemployment consumer confidence that those are all relevant factors that influence incomes which therefore in impact demand but because of income elastity demand so it's more about I think the number one there at the top is is perhaps the most important isn't it what type of product is it product it is yeah yeah yeah normally the product itself doesn't change but how whether you whether or not you might buy it would be sensitive to your income great point thank you great point yeah I think we're on to our last finish with a mini case study yeah our last activity you're so blessed aren't you in Sunderland to have so many youthful small businesses that we can use for our sessions leave it when it comes to naming businesses you just leave it to me Jim so Leafit to me is a landscape and gardening business it operates in a highly competitive market with many other gardening businesses locally it estimates that the Fed for the business is minus two okay should should leave it to me increase or decrease the price of their services what do we think so have a think about that what should it do based on based on uh the price of it's price elasticity demand so what do we think it's minus two what should it do with its prices so Chloe's pointing out that that suggests that demand is price elastic in other words quantity demanded is very sensitive to price therefore quantity demanded may rise by more than a cut in price so she's suggesting decreasing the price yeah so it's always useful here to think of an examples and use the coefficient so if the business decreased the price say by 5% that would lead to an increase in in by of 10% five times the two whereas if it increased it by 5% that would lead to a fall of 10% so really it's telling us that you know by using that because it's price elastic we should be looking at possibly decreasing decreasing the price and also we we're recognizing some are recognizing it's highly competitive so you may imagine there's a lot of substitutes out there maybe gardening gardening there's a lot of gardening services that are similar so therefore you know uh maybe it's competing on price yeah I think that makes a good point uh Paul suggesting the reason perhaps the reason why the demand the coefficient is minus two is that consumers households are quite uh quite fickle when it comes to when it comes to choosing gardening suppliers there is lots of people on live chat also making the point that um the the barriers to entry lots of competition barriers to entry are really low when it comes to garden and landscaping therefore price is possibly the most um Yeah possibly the most important factor when it comes to uh getting the job done i suppose reputation as well yeah yeah uh should we dive in should we dig a bit deeper into this G and uh we came up with Yeah yeah so um so the pen for the business is minus2 which which tells us it's price elastic this means percentage change in quantity demanded will be higher than percentage change in price for example if the owner decreases the price of its gardening services such as lawn cutting or installing patios by 10% the quantity demanded will increase by 20 so we've just got some application there subsequently the owner should perhaps reduce prices as this will lead to an increase in sales revenue because the increase in quantity demanded is much greater than the percentage decrease in price and we've just put a little bit of you know just a little bit of caution there yeah that you know okay a bit of balance there of course reducing the price will lead to an increase in the quantity demanded but you know you know how would the owner cope with the increasing demand maybe they need to employ more gardeners or hire more machinery and if the business can't cope and you you know you book this gardener to attend and he can't cuz he's too busy that could impact reputation so um it's just it's just a nice activity to illustrate you know um you know the application of Yeah um of PE so that was actually that was very similar there was a there was an AQA question around about 2018 about whether a business should based on the information based on the coefficient yeah so that so that was examined obviously you didn't need to provide balance we've just done that in order to um but obviously if he reduces the prices he's going to be raking it in isn't he because um it's going to d it's going to it's going to it's going to double it's going to double well uh K Katie it's it's it's Pier's applicable to both yeah so we need that's why we've covered it because we need an understanding uh we need an understanding of how the coefficients work and we can use M&R analysis and evaluation exactly that what an amazing well we we've almost reached 40 minutes I suppose if you include a little warm-up 35 minutes but uh what a phenomenal phenomenal Oh Vascort's asking whether we can sit next to uh to in the business exam trust me Vas Corp you wouldn't want Graeme certainly wouldn't Graeme Graeme sitting next to you because he never stopped talking and uh I' I' I'd be I I'd have my head down trying to get trying to get the calculations done quicker than everybody else in the live stream which impossible can you just bring a Caitlyn's up please Jim uh so there's still a lot of misunderstandings around this um no no no conclusions for 12 markers 12 markers for only appear on paper three no conclusions needed yeah I mean Sam's asking a question could we get a 1625 mark compelling yeah you could in theory this is AQA specific so we'll deal with it quickly but yeah in theory any part of the specification can be examined in any way and I can imagine a 25 mark question talking about whether price an understanding of price elasticity demand is the most important factor for any business when it comes to making marketing decisions maybe then argue why it is and why it isn't so um could we could we put Henry Hawkings up please Jim yeah let's put that one on so I don't get the difference between uh I I assume you mean plus 1.5 there not not 50 so I'm going to assume you mean minus one so if that was income elasticity demand minus 1.5 would tell us that that um that's an inferior good so if incomes rise the quantity demanded will fall that's what that minus tells us uh if it's plus 1.5 it'll tell us when incomes rise the quantity demanded will increase and that will increase for every 1% change in income it'll be a 1.5% change in demand that's the difference between the two so a number of people asking about other live streams coming up well economics is next up at 12:00 so they'll be kicking us out of here in a couple of minutes uh so financial economics if you're doing economics that's with Jeff uh Graeme and I are back at 1:00 for an NXL session G and we're looking at the first two parts of theme three 3.1 3.2 too and then um about half an hour on that and then we're taking a quick break for half an hour and then we're back with AQA at 2:00 aqa session today is on all the new topics in the specification so we've done a we've put a 30-minute session together that covers them all I think um so there are some new topics that could be examined we don't know whether they will be but they could be uh so we thought we'd do a special section or set live stream just on those so anything else to say J that's been phenomenal work by everyone who's joined us live yeah yeah and don't don't don't and don't be concerned we will be still dipping out of ped in the future live streams we just wanted to do a full one on there um because of the misconceptions and and sometimes students are are struggling yeah but you're doing really well that's good well done for everyone who's joined us so take a break now if you're joining us at for economics and 12:00 go grab a cup of tea if not we might see you at 1:00 for XL 2 o'clock for AQA and yeah just keep going cheers D i'll see you see you shortly mate cheers