The actual value of the price elasticity of demand is always
A) positive because of the law of demand.
B) negative because of the law of demand.
C) positive because of diminishing marginal utility.
D) negative because percentages can only be negative.

Question

Quizplus · Accepted Answer

The law of demand states that as the price of a good or service increases, the quantity demanded decreases. As a result, the price elasticity of demand is always negative. However, the negative sign is often ignored in the analysis and only the absolute value is considered. So, the price elasticity of demand can be expressed as a positive value, but the actual value is negative.

The Actual Value of the Price Elasticity of Demand Is