Week 5 · Readings & resources

Week 5 — Readings & Resources

Principles of Microeconomics Free sample edition

Your primary reading is Chapter 5 (in this module). Everything below is the optional, go-deeper layer — pick what helps, skip the rest.

How to use this page

This page has 10 items (4 readings and 6 videos). Allow 47–55 minutes for everything. Each group points back to the matching chapter section and class-session segment, so use the full menu when you want more, or take the quick path below.

Every video here has captions: turn them on with the CC button in the player. The chapter covers the same ideas in text.

Pick-one quick path (18–21 min total)

① Measuring how strongly buyers respond

Chapter 5, Section “Measure the response: percentages at the midpoint” · Session 1, Segment 1, “Percentages at the midpoint” · Remember: elasticity compares two percentage changes, and the midpoint makes the answer the same in both directions.

Price Elasticity of Demand: What Is Elasticity? Part 1 — Federal Reserve Bank of St. Louis — a short animated explainer that starts from a rubber band, restates the law of demand, and then sorts goods into elastic, inelastic, and unit-elastic by comparing the percentage change in quantity with the percentage change in price. Its closing pop quiz on basketball shoes and natural gas is a good self-test. This builds on Week 3's law of demand: the direction was known, and now the strength gets a number. (video, 6 min) (captions: creator)
Midpoint Method: Price Elasticity of Demand — Economics in Many Lessons — four worked problems that follow the chapter's three steps: the change in quantity over its average, the change in price over its average, then one divided by the other. Listen for two spoken slips and correct them yourself: early on it says 4 divided by 10 is 0.5, though the step it goes on to use is 0.4, and its closing sentence calls an inelastic result elastic. (video, 7 min) (captions: automatic)

② One line, many elasticities, and what happens to revenue

Chapter 5, Section “Separate elasticity from slope” · Session 1, Segment 4, “Elasticity is not slope” · Remember: a straight demand line keeps one slope, but its elasticity falls from elastic at high prices to inelastic at low prices.

Applications of Elasticity: Supply and Demand Part 3 — Federal Reserve Bank of St. Louis — a three-minute animated explainer on why elasticity matters to a seller and to a government: with relatively elastic demand, a 10 percent price rise cuts the quantity sold by more than 10 percent and revenue falls, and with relatively inelastic demand the quantity falls by less and revenue rises. It then applies the same logic to taxes: a tax on an inelastic good raises more revenue, and a tax on an elastic good does more to discourage buying. It does not show that elasticity changes along one straight demand line, which is the chapter's point, so before you watch, find where on the chapter's line a price rise would cut revenue and where it would raise it. (video, 3 min) (captions: creator)
Find the Price Range in Which a Price cut Increases Total Revenue — Economics in Many Lessons — a two-minute worked problem on one straight demand line: it finds the price halfway down the line, where demand is unit-elastic, and then uses the total-revenue test to show that a price cut raises revenue above that price, where demand is elastic, and a price rise raises revenue below it, where demand is inelastic. It calls the seller a monopolist; the revenue logic is the same for any seller facing a straight demand line. Use it while working through the Week-5 module overview. Stop here before measuring who gains from each sale; next week takes that up with consumer and producer surplus. (video, 2 min) (captions: automatic)

③ Responses to income and to another good's price

Chapter 5, Section “Measure responses to income: the income elasticity” · Session 2, Segment 6, “Responses to income” · Remember: income and cross-price elasticities keep their signs, because the sign says normal or inferior, substitutes or complements.

High-income households spent half of their food budget on food away from home in 2015 — U.S. Bureau of Labor Statistics — a one-chart article from the agency's consumer spending survey comparing how much households in each income group spend on groceries and on meals out. Read it as real-world evidence for the chapter's claim that restaurant meals behave like a normal good, and notice that the article reports spending shares, not an elasticity. (reading, 2–3 min)
How to Calculate the Cross-Price Elasticity of Demand — Think Econ — a worked homework-style problem in which one cola's price rises and sales of a rival cola climb, followed by the sign rule: positive for substitutes, negative for complements. It computes each percentage on the starting value rather than the midpoint, so redo its numbers with the chapter's midpoint method and check that the sign, and the label, stay the same. (video, 6 min) (captions: automatic)

④ What makes demand stretchy, in real markets

Chapter 5, Section “Name what makes demand elastic, and meet supply's version” · Session 2, Segment 8, “What makes demand elastic, and supply's version” · Remember: substitutes, luxuries, big budget shares, narrow markets, and more time to adjust all make demand more elastic.

Price Elasticity of Demand: Key Influencing Factors Part 2 — Federal Reserve Bank of St. Louis — four determinants, each with an everyday case: heating fuel versus cowboy boots, steak versus after-dinner mints, shoes in general versus one style of shoe, and gasoline in the short run versus the long run. Its closing self-test deserves care: for the soda brand and the expensive restaurant meal, its own reasons suggest elastic demand, so decide for yourself which label fits. (video, 7 min) (captions: creator)
Gasoline prices tend to have little effect on demand for car travel — U.S. Energy Information Administration — a short energy-agency article explaining why driving barely responded when pump prices fell, with air travel offered as a contrast case, and listing several possible reasons drivers became less price-sensitive. Read it beside the next item. (reading, 3–5 min)
Gasoline demand more responsive to price changes than economists once thought — Federal Reserve Bank of Dallas — two economists describe newer studies that find drivers cut back more than older estimates suggested, and explain why the short run and the long run differ. Together with the previous article it shows that real elasticities are estimated, and that estimates can disagree. Stop before its closing remarks on policy. (reading, 5–8 min)

Optional one-stop reference (free online reference)

Demand — Concise Encyclopedia of Economics — a signed reference entry on demand: this week, read the two middle paragraphs on elasticity and the closing paragraphs on income and related goods, and skip the part that uses elasticity as a test for monopoly. (reading, 6–8 min)

Heads-up (links rot): these point to outside sites that occasionally move or rename pages. If a link ever fails, tell your instructor and use the reference above in the meantime.

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