Explain the significance of minus (-) sign attached to the measure of price elasticity of demand in case of a normal good as compared to the '+ ' sign attached to the measure of price elasticity of supply ?
Answers
Significance of minus (-) sign attached to the measure of price elasticity denotes the sign of the price elasticity with negative to inverse the techniques between price and quantity.
Due to the negative slope of demand curve, quantity and price always changes to opposite directions.
With the normal changes to the positive as well as other is negative with easily determining measured elasticity in the demand negative.
Answer:
The negative sign with price elasticity of demand of normal good indicates the inverse relationship between price level and demand for good. The positive sign with the price elasticity of supply indicates a positive relationship between price of good and its supply.
Explanation:
The minus or negative sign is associated with the price elasticity of demand of normal goods because the demand for such goods is always inversely related with the price. This means with the increase in price, the demand will decline.
On the other the supply of good is directly related with price level. In other words,at higher price level more will be supplied. So, supply increases with rise in price. That is the reason why positive sign is associated with price elasticity of supply.