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Suppose the Apple iPhone 6 has a Price Elasticity of Demand (PED) of -2.8 - Leaving Cert Economics - Question 7 - 2015
Question 7
Suppose the Apple iPhone 6 has a Price Elasticity of Demand (PED) of -2.8. (i) Explain what is meant by the negative (-) sign. (ii) Circle the correct answer in ea... show full transcript
Worked Solution & Example Answer:Suppose the Apple iPhone 6 has a Price Elasticity of Demand (PED) of -2.8 - Leaving Cert Economics - Question 7 - 2015
Step 1
Explain what is meant by the negative (-) sign.
Answer
The negative sign in the Price Elasticity of Demand (PED) indicates the inverse relationship between price and quantity demanded. Specifically, it means that as the price of the good increases, the quantity demanded decreases, and vice versa. This reflects the fundamental law of demand, where consumers tend to purchase less of a good when its price rises.
Step 2