It’s a simple price elasticity of demand question: Price of X increases from $10 to $12, quantity demanded declines from 30 to 28. I thought it would be: (12-10)/((12+10)/2)=0.18 for price, and (28-30)/((28+30)/2)=-0.068 for demand which gives price elasticity of demand as -0.068/0.18 = -0.38 The book’s answer is 0.38 so are they missing a ‘-’ sign or am I wrong?
price elasticity of demand is usually “sign” neutral. We know when price goes up, demand comes down. Only in Cross elasticity of demand is the sign significant.
righto, thanks for that.
sign is important for income elasticity as well