Why do economists pay little attention to the algebraic sign of the elasticity of demand for a good with respect to its own price yet pay careful attention to the algebraic sign of the elasticity of d?

Answer 1

Economists often focus less on the algebraic sign of the price elasticity of demand for a good because it is inherently negative due to the law of demand: as price decreases, quantity demanded increases, and vice versa. Instead, they pay close attention to the elasticity of demand with respect to other factors (like income or prices of related goods) because the sign indicates the nature of the relationship—whether it is complementary or substitutive, for example. Understanding these relationships is crucial for analyzing market behavior and consumer choice.