Calculating the Elasticity of Demand

Elasticity of demand is equal to the percentage change of quantity demanded divided by percentage change in price. In this video, we go over specific terminology and notation, including how to use the midpoint formula. We apply elasticity of demand to the war on drugs, and more broadly to the prohibition of a good when it has an elastic demand.

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0:00 Introduction
0:39 Mathematics of Demand Elasticity
02:55 The Midpoint Formula for Elasticity
05:23 Example Walkthrough
07:27 Elasticity of Demand and Total Revenue
11:59 Practice Question
12:50 Applications of Elasticity of Demand
14:06 Profiting from Bad Times