[Anonymous]

Got a crazy question in relation to the calculation of price elasticity or inelasticity. It may be crazy, but you never know unless you ask…..

Say the overall calculation is:

5% increase in demand / 10% increase in price = .5 (inelastic because it’s below 1)

If there’s ever a drop/decrease in either of the following…..am I correct that the answer will always be positive?

[kperrucci]

Yes, its just change in demand over change in price. The change is not classified with a positive or a negative. Because in reality, usually the demand would decrease as the price increases (if it is elastic), but the number itself will be represented as a positive number. The sign is irrelevant.

FAR 4/9/2011: 88 (Becker)
AUD 5/16/2011: 88 (Becker)
REG 7/1/2011: 82 (Becker)
BEC 8/3/2011: 91 (Becker and Ninja)

[Author]

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