Introduction to Economics 1 Deneme Sınavı Sorusu #1256829
About the sign of the price elasticity of demand which of the following statement is correct?
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The sign of the price elasticity of demand can be negative or positive. |
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The sign of the price elasticity of demand is always positive because of the law of demand. |
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The sign of the price elasticity of demand is always negative because of the law of demand. |
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The sign of the price elasticity of demand is always negative for normal goods, but positive for luxury goods because of the law of demand. |
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The sign of the price elasticity of demand is always negative for luxury goods, but positive for inferior goods because of the law of demand. |
Price Elasticity of Demand
The sign of the price elasticity of demand is always negative because of the law of demand. As you remember, the law of demand states that an increase in the price of a good causes the quantity demanded of the good to fall. In the example above, the sign of the elasticity is shown with plus sign due to the common practice of dropping the negative sign in economics.
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