Prof. Rowe and Liam illustrate the elasticity of demand for a product regarding price changes as a possible explanation for tariff consequences (simulation)
Script: Characters: Professor Rowe : International Economics professor, thoughtful and clear communicator. Liam : First-year economics student, curious and eager to understand real-world applications of trade theory. Scene 5: Office Hours, Discussion on Elasticity of Demand Liam returns to Professor Rowe’s office, intrigued by a new economic term from class. Liam: Hey Professor Rowe, we talked about elasticity of demand today in class, but I’m still trying to fully grasp it. Could you explain it a bit more simply? Prof. Rowe: Of course, Liam. Elasticity in economics is basically about how sensitive people are to changes in price. Precisely, price elasticity of demand measures how much the quantity demanded of a product changes in response to a price change. Liam: Could you give me an example? Prof. Rowe: Sure, let’s imagine a scenario. Suppose a car costs $30,000, and the current demand is 100 units. If the price goes up by 25%, we determine the new price. Liam: Okay, 25% of $30,0...
