So now let's see how we can actually get different elasticities using the same data. The problem here ends up being with our percentage change formula. Remember that when we were using percentage change, by the way, this is the shorthand, percentage and the delta, the triangle here is change. We would do the change over the original which was basically the new minus the original, right? That's the numerator divided by the original right. So the change divided by the original gives us the percentage change and it's actually in this denominator that we end up having our problem. So let's go ahead and see through these examples. Let's see it in action. We're going to get a different elasticity when we're raising the price and when we're decreasing the price. So let's see this example. A pizza company's lunch special currently costs $5. At this price, the weekly demand is 2,000 lunch specials. If they raise their price to $6, the weekly demand will drop to 1,400 lunch specials. What is the price elasticity of demand? Alright, so let's go ahead and start. Remember our formula for elasticity of demand was our percentage change in quantity demanded over our percentage change in price, right?

So let's go ahead and start with the quantity demanded and I'm gonna go here and we're gonna use our percentage change formula just as I've written it above, new minus original divided by original. The percentage change for quantity demanded, let's see. First I'm going to circle all our data. We've got in blue, I'll circle our quantity demanded: 2,000, and it went down to 1,400, and in red I'll do the prices. Well, I've been using red. I'll use green for the prices here, the color of money. 56, right? So let's start with our quantity demanded and we had a demand of 2,000 and it dropped to 1,400, right? So our new is 1,400 minus the 2,000 divided by the original of 2,000, right? So our original demand was 2,000. Our new demand was 1,400. What is going to be the difference here? We're gonna get negative 600 over 2,000. Right? We put that in our calculator and we're gonna get -0.3. Right. But remember we're gonna drop all the negatives and positives because we're always gonna get one of them negative so we're just gonna say 0.3 absolute value

Let's do the same thing for the price, right? For the price, we had a price of $5 and it went up to $6 so the new was 6 5 минус 5 5 equals 1 divided by 5. Put that in our calculator and we're gonna get 0.2. Right, that oops. Can you see that there? Alright. 6 minus 5 divided by 5. So it gives us 1 / 5 and we're gonna get 0.2 here for our percentage change in price and we had 0.3 here for our percentage change in quantity demanded, right?

Okay. So let's go ahead and solve for elasticity in this case and I'll do it in red here. So elasticity of demand is going to equal that percentage change in quantity demanded, 0.3 divided by our percentage change in price which was 0.2. Right and what does that give us? It's going to give us 1.5. So our elasticity in demand in this case was 1.5, right, and when we get an elasticity of demand greater than 1, right, that means that it's elastic. So in this case, we got an elasticity of demand greater than 1 and elastic, 1.5. So let's go ahead in the next video. We're going to do a similar example with similar data. Check it out.