tricky question

Hi All, I took 1010/1011 in NYC on Sat and came across what i thought was a pretty tricky question on price elasticity of demand. So if the quantity demanded increases when price decreases, the value for PE is negative, and that was my calculation on the test. However, there were no options with an answer <0, and since the question asked for the ‘closest’ number, I had to choose the lowest positive number from the options. Did anyone else notice that?

hmm…never thought about it like that…I disregarded the negative sign…

Same here, ignored it… I don’t think they would trick you like that… Wasn’t the point of the question inelasitic demand~.8

actually remembered something from schweser that said on exam you may see a question on PE of demand where they toss out the neg. sign…but do work son is correct, the question was more of an elastic/inelastic question…and whether you knew to take the % change of q and p from the average q and p.

yea i think my calc was more like -0.9, but it does sound like i overthought this one :stuck_out_tongue:

it said in the CFAI text that the sign is irrelevant, cos for demand, it’s always gonna be negative, because of the downward sloping curve

I think the -ve sign is a given, and should be ignored. The absolute value of elasticity is generally quoted (unless of course its income elasticity or cross elasticity). For the life of me I cannot remember that question. I have no recollection of an elasticityt question at all, and I had 1010/1011 as well…hope I didn’t skip it…

you didn’t delhi…i have had the same thing with a lot of the questions referenced today…its a lot of questions to remember and it was early in morning.

chill out delhirocks, that’s 1 question out of 240, and if you had it, I’m sure you would’ve gotten it, just take it easy