Question

True or False with Reason:

The coefficient of price elasticity of demand is generally negative. However, minus sign is ignored for the sake of convenience.

Answer 1

This statement is true.

Explanation:

• Price and quantity demanded move in opposite directions, so the coefficient is generally negative.
• The negative sign is always implied and is ignored when comparing elasticities in absolute terms.
• This is why elasticity is usually expressed as a positive number.