Explain why the price elasticity of demand is negative. what would the price elasticity of demand be for a "prestige good"

prestige-good

#1

explain why the price elasticity of demand is negative. what would the price elasticity of demand be for a “prestige good”, one for which quantity purchased increases as price increases? How do you reconcile these two statements?

Answer:

the price elasticity of demand is negative because as the price of a good goes up, the quantity demanded goes down. they have an inverse relationship.

for a prestige good, this will not be the case, so the price elasticity of demand will be positive

if price and quantity demanded go up together, which is uncommon, they have a direct relationship because they go up together and elasticity is positive. if price and quantity go in opposite ways, when one goes up the other goes down, they have an inverse relationship and elasticity of demand is negative.