Explain the reason for the negative sign used for price elasticity of demand???
Dear Student,
Generally price elasticity of demand is a negative number. This is because of the fact that the there is an inverse relation between between quantity demanded and price of a commodity. That is , Demand and Price are negatively related to one another, a rise in one will lead to a fall in the other. Thereby, making the price elasticity negative. But, while calculating the elasticity only absolute value is taken, minus sign is not taken into account .
Regards
Generally price elasticity of demand is a negative number. This is because of the fact that the there is an inverse relation between between quantity demanded and price of a commodity. That is , Demand and Price are negatively related to one another, a rise in one will lead to a fall in the other. Thereby, making the price elasticity negative. But, while calculating the elasticity only absolute value is taken, minus sign is not taken into account .
Regards