The formula for the price elasticity of demand
A)relies on statistical data.
B)is based fully on knowledge of the slope of the demand curve.
C)in practice drops the sign and focuses on the magnitude.
D)is valid only when the price of product increases.

Question

Quizplus · Accepted Answer

The price elasticity of demand formula indeed focuses on the magnitude of elasticity, ignoring the negative sign that indicates the inverse relationship between price and quantity demanded. This is because the interest is in how much quantity demanded changes in response to price changes, not the direction of the change (which is always negative under normal circumstances).

The Formula for the Price Elasticity of Demand