Since it is always a negative number, economists use the convention of taking the absolute value of:
A) income elasticity of demand.
B) cross price elasticity of demand.
C) price elasticity of supply.
D) price elasticity of demand.

Question

Quizplus · Accepted Answer

The convention of taking the absolute value is applied only to the price elasticity of demand since it is always negative due to the inverse relationship between price and quantity demanded. Taking the absolute value allows the elasticity to be expressed in a positive number, which makes it easier to interpret. Absolute values are not necessary for income elasticity of demand or cross price elasticity of demand as they can be positive or negative depending on the nature of the relationship between two variables. Price elasticity of supply can be positive or negative depending on the availability of resources to produce goods, but it is not conventionally expressed in absolute value.

Since It Is Always a Negative Number, Economists Use the Convention