Another important thing to remember is that percentage changes can be positive or negative

# Another important thing to remember is that percentage changes can be positive or negative

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Another important thing to remember is that percentage changes can be positive or  negative, but elasticity is always an absolute value. That is, even when an increase in  price is paired with a decrease in quantity (as with most demand curves), the elasticity  will be positive; remember to drop any minus signs when finding your final value for  elasticity.  Let's apply this and solve for elasticity in the market for ping pong balls. When ping pong  balls cost \$1 each, Alice is willing to buy 10 balls, and Joe is willing to sell 10 balls.  When they cost \$1.50 each, Alice is willing to buy 6 balls, and Joe is willing to sell 20.  First, let's solve for Alice's price elasticity of demand:  % Change in Quantity = (6-10)/10 = -0.4 = -40%  % Change in Price = (1.50-1)/1 = 0.5 = 50%  (-40%)/(50%) = -0.8  Take the absolute value to find elasticity.

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## This note was uploaded on 12/13/2011 for the course ECO 1320 taught by Professor Staff during the Fall '11 term at Texas State.

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Another important thing to remember is that percentage changes can be positive or negative

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