Can price elasticity of demand be negative?

1 Answer
Feb 23, 2016

Answer:

In fact Price Elasticity is Negative, but we take only absolute value only.

Explanation:

Price Elasticity of demand is always negative. Only thing is we ignore the negative sign in order to have an idea about the kind of price elasticity.

The demand curve is negative, hence -

#e_d=(Delta Q)/(DeltaP)xxP/Q#

Where -

#DeltaQ=#Original Quantity #-#New Quantity
#DeltaP=#Original Price #-#New Price

Hence, there is chance for either #DeltaQ# or #DeltaP# is negative.
Then, when you simplify -

#e_d=(Delta Q)/(DeltaP)xxP/Q#

Its value will be negative.

We take modulus for #e_d#

Thus we take absolute value only and ignore negative sign.