the cross-price elasticity of demand is defined as the percentage change in the quantity of one good when the price of another good changes. Again, the sign can be either positive or negative. If positive, the two goods are substitutes -- when the price of coffee goes up, the quantity of tea also goes up.
Consequently, is price elasticity of demand always positive?
Price Elasticity of Demand. The first law of demand states that as price increases, less quantity is demanded. This is why the demand curve slopes down to the right. Because price and quantity move in opposite directions on the demand curve, the price elasticity of demand is always negative.
What is the price elasticity of demand?
Price Elasticity is a measure of the relationship between a change in the quantity demanded of a particular good and a change in its price. Price Elasticity of Demand (PED) is a term used in economics when discussing price sensitivity.
Is PED elastic or inelastic?
If quantity demanded changes proportionately, then the value of PED is 1, which is called 'unit elasticity'. PED can also be: Less than one, which means PED is inelastic. Greater than one, which is elastic.