The income elasticity of demand for bus travel is estimated to be -1.5. Yeah. -1.5 maybe that is elasticity. Impthat. Income elasticity of demand. Yep. Income. So income goes out and that's one point of five. I'm bus travel income. No, it's elastic, but it's a negative relationship. So as income goes up, bus travel will go down by 1.5. So if income goes up by one, bus travel goes down by fair to 1.5. Okay. So an inverse relationship. And as people become richer, they buy less of this good. Yeah, so. So this one maybe so this one maybe that that means as unemployment falls, more y more more people will use buses. No. When unemployment falls more, less people will use buses because they can spend more. There's not that one person includes fares. What means fasmith affair is the cost of traveling. So the cost of a ticket fares will lead it to which fair. Yeah will lead to 50% decrease in passengers. Don't get too excited though because this is about the increase in fares is about the. And we are not doing price, we're doing income in case of demand. Yeah. So this one last estimate, negative growth, but travel and negative growth, elasticity of demand. This is about the demand and the price. So no income. So I choose the bus travel is inferior. Good. You would be correct. Yes. The rest just arenright this. This first one links the price less ticity of demand. This one that you said b is the wrong way around. C, it's cross elasticity of demand to rail travel. We've got no information about rail travel. Like that's just nonsense yeso the top one's pricelesticity of demand, the next one is wrong, the third one's cross price elasticity, and the bottom one is the correct answer circuit. Explain why a firm might try to reduce the price elasticticity of demand for its products. Not for why not try? Why this one might try to reduce a. So reduce the price of try to reduce the price elasfor, reduce the price price elasticity of demand. So the value between one and minus one is the elastic, in elastic, again is elastic or in elastic right between between Norton wataram. Okay. Things like that. All those are in elastic. Elastic would be. One words, one words. That sort of thing would be elastic yet. Yeah. So basically this question is asking why would they try to reduce the price elasticity of demand? So why would they try and make it inelastic? Yeah没有。Elastic and inastic try to reduce that. So zero to one and Oh my God, so -11. So between one and minus one is in elastic. So the minus over one minus one or over one smaller than minus one or over one that is elastic. So it should reduce and this say, Yeah, obviously that may that will increase in the that will. He is an elastic. Elastic. Elastic so. Three mark. Industry goods means that when price increase, it does not, it will not increase the demand, the demand will not decrease, like, decrease like asms, the price. So maybe this, maybe this firm wants to earn, wants to receive more profits. So they want to decrease the they want to decrease the price elasticity demand because zero to one is in elastic and the formula of the. P E D plastic applies elasticity of demand is that. Is that cenchanges divided by Yeah the delta price change divided by delta quality demanded. Hang on, let me just write here. So it's what we do in price. Less is Simma demand. Your pd equal to change in. Remember the q is always at the front quantiquantity high I put demanded but Yeah remember the balloons at the top it's interesting quantity to my attention you I by q Yeah Yeah and what does that mean if you're exactly right? If they do drop their decrease their price elasticity of demand, talk to me about what they can do about prices and what that means to the overall value of the sales prices. So if there is celless any elasticis, then maybe more a less price. Is there less price if we want to good. No, no, no, no, no, more price, more price, more price in the same change in quantity demanded. So they may be about this. Maybe they want to increase the prices, but the and the quantity demanded is same. Yeah, maybe not the same, but the reduction isn't isn't as big. So basically the whole point is that if the price elastictive demand is low, so in elastic, which would be between Nord one, Yeah, sorry, Norand one than any increase in price. Leads to only a small. Reduction in quantity demanded, doesn't it? Okay. It it now means that people are not price sensitive. They will buy whatever the price. Okay, so think about things like petrol or diesel or electricity, things like that, and then you can lead it into so that price says ds by whatever the price. So therefore a business can increase the price. Which leads to. A slight. In volume of sales. Increase in p leads to only a small reduction in Q D. People are not price sensitive by whatever is a price. Increase the price leads to only a slight reduction in volume of sales, but the value of sales is higher due to price increase with the business gain. Its the price leads to only a slight reduction in volume sales, but volumes journey to sales volume value of sales, higher volume volume due to price increase leading to increase in profits, the increase in profits. So they want the increase in profits. Yeah. So volume is how many and value is basically many times price. Yeah. So how much you make because remember, like you could have a business that's sold three items, but if they're selling three sports cars, their value of sales is massive. If you are selling notepads and you only sold three, your value of sales is very small. Okay. All right, are we okay with that? Perfect. I still haven't managed to replace the things in my mouth se, so we're still not very good with the mouse. Here we go. Is that the next one? I don't know if I missed one. I'll forgive necessary. This one, see small more. Yeah between 2016 and 2017, the average price of a new build houses in the uk rose by an estimated 5.4% with rareferference date by the calculate the price elestictive supply for new builds between 2016 and 17 price elasticity of supply. So. First ones are calculated, the price elassales supply elassales supply. So price elassupply plain formula. Price is a formula, but that is 5.4%. So it's given you one percentage, you need to work out the other percentage percentage. Have you got a calculator or not, or you want me to do it? Actually haven't got my one, six, two, eight, eight, eight, eight, zero, minus one, three, four, six, one, two, divided by one, three, four, six, one, two times 120 point 21, maybe 5.4 divided by this answer. So. Note point 26. Which way did you divide it? Because this is your I haven't got a calculator, but this is your quantity and this is your price. Yeah but did you do? No, you haven't have your because you said that was 20%. Did you 20% or 21? You heard divided by 5.4162880-1346. I think you put these two the wrong way up at the end. I think that's where it's gone wrong, really. 20 is that 20 divided by Yeah or 21 or whatever is Yeah maybe 21, divide de it by 5.4. I think you've put the wrong way. I think that's what happened at the end. I think sorry, point nine, Yeah, sounds more sensible here. Remember, the quantity is always on the top, balloon quantity always on the top. Good. A 2.5. Oh my goodness, you scroll it down. You've got better control than may. Go to the next question. Have you got control of it? So take it down to the next question because I seem to just be. Okay. So moving this out there you. No, no, there's one. There was one before that. We've missed one. Conwe. Oh, is it multiple choice that one? A, two point because b, we should be on b, Oh Yeah, sorry. A 2.5 increase in new built to house prices in one region of the uk causes a 10% increase in the number of houses built. All things remaining equal, this suggests that supply of new house builds is. That is 2.5% causes a 10% increase numbers. So that is cendivided by 10.5 equal to four, four. Is that right? Four Yeah 44Yeah. So if that is equal to four. So why that is not perfectly because it's not it's not it's not 100% perfectly elastic or inelastic. So if it was perfectly inelastic, then regardless of the change in quantity, the price would stay the same. So that's where it has no, to be honest, nothing is perfectly inelastic or elastic. Can remember when we talked about this, we were saying the only thing that we could get close enough to it would be something like water. But you would even so, it wouldn't be perfectly inelastic because you would still try and reduce how much you needed. So the idea being that you would, whatever the price, you would still buy the same. It just doesn't really work like that. Do you see what I mean? Yeah. So really work like that. So that is not perfect. So if that is 1.2, so if that is 1.2, is that the no? You said it was four, didn't you? Yeah. If that is 1.2, is that perfect? No. Note. So which value is a perfect on is a perfect elasuh the price elasticity or what is the Yeah the perfectly priced elaselastic or in in elastic. Infinity and zero. Infinity to zero. So that so this is perfectly inelastic. So that is two extreme value. Yes. Hence what I'm saying to you, it doesn't really exist in like it's more of a theoretical concept because if you think of anything, the price, the whole idea, if something is perfectly inelastic, what you're saying is that no matter the price, people still buy the same amount. Yeah you could put the price up you know wherever and it would still be. Like it still be, you would still buy it. And this one is even more bonkers. This one is the idea that at that price, whatever that price is, they will buy an indefinite quantity. They will buy all of them. And if it goes up even slightly, theybuy nothing. So it's just the very extremes of elastic and inelastic. Okay? I know that the relative price in asis infinity to zero, but that is four. So that is relative. So that is four. So we mentioned that between one and minus one, that is in elastic. So that is elastic. So I choose say and yoube correct. Okay. Explain one factor that is likely to determine the price elasticity supply of new house builds. One factor that is likely to determine the price elasticity of supply of new house builds. So two Marks. Firstly, price elasticity of supply equation is that. Is that same same it's percentage change? Oh, sorry, did I move that on you? I didn't mean too sorry that is the quantity supplied divided by the price perfect that is changing Yeah determine the price elastic supply so maybe that will maybe that will the maybe be the change in the in price change in price no a different factor that can't be related to price because price is in the formula so tell me just maybe get wage maybe the workers want more wage Yeah Yeah availability of as a cost will as a cost is increasing so if the value in value of quality supply in is decreasing so that one will turn to elastic will maybe will be smaller the price elastic still supply will be smaller exactly exactly always with these ones you can think of. Technology available of land, available labor. This one you sort of you were touching on as well, but you could have had in the skills as very specific skills isn't there? They might play with the main ones. Good. Amazon Prime, Netflix, now tv all charge 700 and and $0.99a month for streaming very similar television services, the most likely cross cross price elasticof demand for close substitutes. Ha. Oh, subsidies. Now can you remember point nine? Can you remember the formula for subfor cross price elasticity of demands demand? Yeah I mentioned it. Yeah, I Yeah I have mentioned it. Yeah the price elasticity of demand is equal to the quantity demanded divided by the time, but that is cross price elasticity. So that is the. The same Yeah the quantity demanded in the quantity demanded in the good a divided by the price in good b. If that if if that is negative they are component. Is components. But if they are the if they are if they are positive, they subsidies, substitutes. Good negative is compliments and a high number. Fine number positive. My number positive is that it's very close subsidies substitusubstitutes to be careful subsidies of what the government plays. Substitute is what you change for one for the other substitutes. Yeah. So which one of them is most likely to be so it's a very close subsidies since a high substitute don't miss is that the high number negative is that the close component and complements complements Yeah components and are so that is positive huge I choose the positive 2.1 you would be exactly right. Well done. Well done. Well remember membered well remember ed do you remember that formula was good. Well done. Next one win this one. In 20016, the average cinema ticket price in the uk was seven pound, 41 and there were 19.1 million ticket sales. The price elasticstidemand was estimated to be -0.5. Calculate the new total revenue. If prices were raised from 3% in 2017 to seven round 36, if everything else remained unchanged. Everything changed. Three mark. Total the value. Every cinemaverage cinema ticket price in the uk was 7.41. Is that 7.417 pound 41, seven pound 41 pence, is that pounce? Is that cheap? I think that may be cheaper than there. I think cheaper than there. Maybe, but it's 20016, isn't it? 60 what's that? That's the date. Look, 2016. Oh, maybe. Yeah, no. Yeah makes sense. Yeah I watched two films at whesome and every ticket is above twelve pounds. So I say that when when it is very cheap. Why one is cheaper? Yeah, it is it is before ten years ago ten years. Yeah and this is inflation. You've just you've just experienced inflation then look, this this would be accurate as well because they wouldn't have put this in the exam if it hadn't been accurate. Theyof research there. So that's probably accurate. And then so there you go. Inflation in working for you. Cinema tickets have gone up lots. What's the next one new total revenue, the price stc of demand? By 3% knew if if the prices were raised by the 3% to 7.63 and if everything else remained or changed. Okay, so we need the change in total 3.2 total revenue Yeah 7.63-7.41 equal to 0.22 and then times 19.1. So that is the revenue. 4.2 million. I need to calculator. So how to so how how to do that? So we've got let's do on here. You might have to do the calculation sytwenty 16. We've got. Yeah prices raised by 3% in 2017 to 7.6 the ray. So we need the difference between no, we don't because we've now know okay. Because we know what the price elasticity of demand is. So we know that, that equals -0.5. We already have. Oh, Oh, no, no, no, no, no, no well by done. Where is it? Right equals 0.5. We already have the price. Your unknown is the quantity. We don't know this quantity. We've got the price which is. A new total revenue of price raised by 3%. To 7.63. 19 million. Oh, why let my brain do this without a calculator? It the new tecrevenue prices were raised by 3%, 20, 17 to six, if everything else remains unchanged. Penchange quantity. So this is 3%. Yeah. So what's this number? So what's three times. -0.5. -1.5. Yeah -1.5 that is 3% so this equals -1.5. Yeyeyeah, Yep. So that is 3% times, not 25. That is the one -1.5%. And this gives us the change in quantity demanded. Yep. So we then go from this. We times it by 19.1, so we do 19.1. Times -1.5. Times 1.5. Is that right? Because we basically need to do the qutum. We need to get this. This is our price celminus 1.5%-1.5%. Yeah. So if that is -1.1%, so that is not only noone. Yeah, that's right. Yes, percent, because what we need to do is work out the new quantity and then to get our revenue, we need to do quantity times the new price. So all this is just one point, not not upon to there not point. And that is point. Huh? We need to work out how many tickets were sold. We need to do 19.1 times -1.5%. So we need to we you see a reduction of 1.5% on 19.1 million, don't we? And I can't do that in my head. It's going to be I hate. Can you do 1:19.1-1.5%? Five minus. 1.5%. Yeah take 1.5. We need we need to know we need to take 1.5% off 19.1 million. So divide it by 100 times 1.5 and take that off 19.1 or divided by 100 times, 98.5. Firstly one -0.015 equal to this number times ds nine, 19.1, 1000008, right. So the what we're saying is the quantities gone down to 18.8 million, 18.8 said and now we need to work out so that's 18.8 and now we need to work out total 18.8 million yeand. Now we need to work out total revenue. So that's how many tickets now we need the new price, which they've given us in the question, which was 7.63. So you then need to do to get total revenue to do price times quantity. This isn't a very nice question, is it? It's a bit of a hard question. Normally the MaaS ones are Tiso. You need to 18.8 times, 7.3, 7.633. And thattell us. Total revenue. Total revenue. So is that 19.8? Why is that short? Times 7.63. Total revenue equprice times quantity. So this number times 7.83, 7.63? Yeah, 143.5 million. Yeah. That was a hard question for three Marks. That's not very nice. That question for three Marks. Maybe, maybe. There was two steps in there, two not very nice steps. One you needed to make, you needed to work out the missing percentage here because it get normally it makes you work out the answer but it didn't it had given you the answer and you needed to find this missing sort of thing in the equation here, didn't you? Because you didn't know the percentage change in quantity. That was your unknown this bit. So you needed to work that out first, then you needed that's your percentage change. So you then needed to sort of effectively take that off your original. Round to get your new quantity and then you needed to know that total you need a spot in the question that it wanted total revenue and you then needed to do the amount times the price being the new price. Of course, that's a bit of a mean me question for three Marks in my opinion. But Yeah. Do you understand kind of the steps we had to go through? Yeah so that is 3% raised by 3%. So we should use the equation and the final value value is -0.5. So we can know that quantity demanded percent times cent 19.1 million. And we can know that the exact quantidemanded now and times 7.63 and we know the total revenue over. Not very nice. Oh, you would pick you would pick this for a Sunday night. Got to get our brain working. And I haven't brought my phone or a calculator in. So we are doing well, right? It's the Fredo. We've looked at Fredo before. The uk Fredo is a popular chocolate snack brought by children who are under ten. That's not everyone likes a Fredo. Fredo's income and assiof demand is estimated to be minus, not point. Does that say one? I don't. Can you move that so we can actually see the whole question or not? I can't move it sort of slowly enough. Can you move it up just a tiny bit or not? You've got better control of it than me. Yeah, Yeah, perfect. So calculate the percentage change in quantity demanded for fredoes between 2015 and 17. Oh, again, it's given you the it's given you the answer is paraokay. So does that give me the answer? It's given you like Yeah, it's given you. So firstly, 1.75 divided by seven. Yeah 0.25 time me's not one owhile minus. Times 100. 2.5%. Over -2.5%. I choose c. Yeah, it sounds quite right. I mean, I can't check it. But the other ones, look, if you've done your matths right, you're right. You've done the right kind of way. Explain one reason why the income elasticity of demand is significant to the producer refredoes, so exactly like the other question we did at the beginning, it's just different words. It's basically asking, why does a firm that produces these chocolate bars care about income elasticity of demand for fredows? Why do they care? R, now, we did price elasticity of demand before this one's income elasticity. Why would they care about that? The of. One reason is to be a producer. And pawhat means feders is that consumers, this, this, this is the chocolate bar, the name. This, that is the name of the chocolate bar. It's a low chocolate bar. It's the name of the chocolate bar, Fredo. The in the question here, look, in the question above, in the uk, is that a British chocolate bar? Yeah, it tells you here. Look, it tells you here. Look, popular chocolate s snack. You can go the. It's chocolate with caramel and it's got a stupid frog on the front. Which. Oh, adjust it. Lint. Is that lint? Is that lint? Lint, lint. Chocolate. That's nice. Yeah. I just eat. I just eat lint chocolates, not free dough chocolates. Oh, you only lint. Lint. A good chocolate. Nice chocolate. Yeah, Yeah, Yeah, Yeah. I have eaten. I have it. Lint chocolate sinand let me think Yeah things the balls, the like round chocolates, the funny chocolate. Yeah the milk chocolate is the boyeah in London. They've got a big lint shot Yeah and you can pick Yeah Yeah Yeah bought some in London. Yeah I bought some in London. Yeah but my first, my my first memory to link chocolate maybe is in, Oh my God, it's very distant. It's very long. Let me think maybe 20, 17, maybe about ten years. Oh wow. Yeah, Yeah, Yeah and that time I was traveled into the Switzerland Oh, linked chocolate. Yeah, Yeah, Yeah. At therland I ate the first the first linked chocolate in my period. Yeah Oh, so you like they like it now they're my mom's favorite lint chocolate. Yeah I like happiness chocolate. Yeah because I read a book for Ian Cherry and his chocolate factory maybe that he Yeah. So I, so my so my favorite chocolate is the milk chocolate. So and at that end the linked chocolate is very delicious with the milk chocolate. So Yeah Yeah Hey ked chocolate is the first foreign foreign chocolate for me. Is you like the English chocolate? No. Do you like English chocolate or not really English? I don't know exactly. But I think I think Yeah some Yeah some students Yeah some students maybe maybe in year ten, maybe some students give me the Christmas present, a secret center. And that is chocolate. Maybe that is a British chocolate, but I think it's too sweet. Oh no, it's lovely, lovely, lovely. But it's too sweet. You're not sweet. Oh, nice. I like linked chocolate. Yeah, Yeah. Oh, that's probably the one I like. Caprice is the one I like. Is it purple? Purple? Yeah, he's purple. Yeah. The purple. Yeah. That's the best one. Youlike lint, Linds, a bit more classy, a bit nice, right? Okay. So these are fredoes. These. If you don't like cabreries, you won't like fredoes. So you won't like these. Okay. So explain one reason why the income elasticity demand is significant to the producers of let's do lint. Because you like that, let's change. Change. It maybe I should be used no no, maybe freedas maybe I can improve my. Go on there. Enemy search, what is cover? This frefreus is that fretus is a frog. Yeah, frog. It's called fredoes safe fredoes. It's like the name frered fredoes letus frered, you know, like the name Fred. Still fredoes producers. So was in common because also first, the income elasticity of demand is is the percentage change in quantity demand manded divided by quantichange in price. No, careful. So, so careful. Centage change income, yes, income producer. So if people have have more have less income, so they will be so the value of the income elasticity of demand is increase. So maybe that is not very good for them. So they think about, is it a luxury? Good. People might wear less of it. That's really good. Freis, that is that for normal? It's probably normal good. Isn't maybe that is a normal good? Maybe that is a normal good. So maybe I know that. So by the way, maybe I know that is a chocolate frog from Harry Potter. Maybe it's from frfreders. Yeah, maybe you showed it fromaybe it's from fritters because the cover, the cover and represenfritas fritas, maybe that is frog. So maybe Yeah the chocolate frog, but Henry and Yeah George, maybe that is Yeah maybe that is advertisement. Yeah wealey twins. Yeah, basically twins. Yeah. Definitely, definitely. Wow. So so so what's the result when it is a higher incoming elasticity of demand, it will be more sensitive for the consumers Yeah that they will buy more or less of it depending on incoviincome goes up or down. And therefore, if we were going into a recession, then the company might have to plan their resources to produce less chocolate bars. If there is a very high link between income elassted demand and the and the purchasing of the chocolate bars. So if we knew, if we were watching the economy and there was lots of you know, recession, people losing jobs, their income going down, then we would need to you know, plan and make less of these frered obbars. But if the economy was rising and people's incomes were rising, we would know, actually, hang on, people are going to buy more of them because it's a normal good and people will buy more of them. And therefore, I need to change my resources and make more basically. Yeah it helps them plan, doesn't it, to know how many and when there is more income in a still of demand, I mean, for example, from one to four. So the consumer will be more in less more sensitive and they may be there will more substitutes. Yeah, it's basically that they are more sensitive. To changes in the income. Fine. So they could substitute. But remember, the question is about the producer, the factory that makes fredoes. So we have to link it to the factory that makes fredoes. So the best way to think about that is how the factory is resourced. So the resourcing in the factory. Yeah. And. That can either be increasing the resourcing or decreasing it depending on what's going on. So there will be less consumer confidence for them to buy frethis because there is animals spirit. Okay, there we go. Yeah, Yeah, Yeah. And they're just like they're going to have to put their money elsewhere. It's a normal good. That's what they're going to buy less. But is more significant because it depends on whether the consumer will change their mind in in consuming the product of readers. Yeah, exactly right. If there's a high income elasticity of demand, it means it's a really like it's going to change. If it's inelastic, then people are going to buy them anyway. So they the company doesn't need to worry. Yeah okay, any questions or anything? Oh no No Okay before you have a lovely evening rest your evening relax and I will see you soon take care, bye bye bye.