Calculating Elasticity and Percentage Changes
Read this article on how to estimate elasticity. Make sure to answer the "Try It" questions.
Try It
Answer to Try It
- law of demand.
Correct. The negative sign reflects the law of demand so at a higher price, the quantity demanded for a good or service declines. All price elasticities of demand have a negative sign, so it's easiest to think about elasticity in absolute value, ignoring the negative sign. - law of inversion.
Incorrect. The negative sign reflects the law of demand so at a higher price, the quantity demanded for a good or service declines. All price elasticities of demand have a negative sign, so it's easiest to think about elasticity in absolute value, ignoring the negative sign. - law of supply.
Incorrect. The opposite is true. The negative sign reflects the law of demand so at a higher price, the quantity demanded for a good or service declines. All price elasticities of demand have a negative sign, so it's easiest to think about elasticity in absolute value, ignoring the negative sign.