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# elasticity of demand and supply questions+

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1. Price elasticity of demand is always negative, but referred to a positive. If an exam question came up would the price elasticity of demand be positive or negative?
What does a higher price elasticity of demand mean, e.g. -5 and -2. What is the difference?
Why is price elasticity of supply is between -1 and zero for most goods?
does a bigger cross elasticity of demand mean products are closer substitutes?
2. Sorry you've not had any responses about this. Are you sure you've posted in the right place? Here's a link to our subject forum which should help get you more responses if you post there.

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Just quoting in Puddles the Monkey so she can move the thread if needed
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3. (Original post by Beccatenney)
Price elasticity of demand is always negative, but referred to a positive. If an exam question came up would the price elasticity of demand be positive or negative?
What does a higher price elasticity of demand mean, e.g. -5 and -2. What is the difference?
Why is price elasticity of supply is between -1 and zero for most goods?
does a bigger cross elasticity of demand mean products are closer substitutes?
PED is always negative due to the law of diminishing marginal utility. However, when assessing magnitude, you ignore the negative sign and consider just the magnitude (so -5 is more elastic than -2)

Higher price elasticity of demand simply means the change in quantity demanded of a good is more responsive to a change in price

This is because supply is usually inelastic in the short run (also, price elasticity of supply can never be negative, due to the upward sloping supply curve)

yes, but the + and - sign matters in this case.
4. I gather you're sitting the exam tomorrow?
5. (Original post by Beccatenney)
Price elasticity of demand is always negative, but referred to a positive. If an exam question came up would the price elasticity of demand be positive or negative?
What does a higher price elasticity of demand mean, e.g. -5 and -2. What is the difference?
Why is price elasticity of supply is between -1 and zero for most goods?
does a bigger cross elasticity of demand mean products are closer substitutes?
The PED for all normal goods will be negative because a rise in price will cause a fall in quantity demanded and vice versa. When, however, we analyse the significance of the PED the sign is often ignored.

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