CFA Practice Question

There are 539 practice questions for this study session.

CFA Practice Question

Which of these ratios is (are) always negative?

I. The price elasticity of demand
II. The cross elasticity of demand for a complement
III. The income elasticity of demand for an inferior good
IV. The price elasticity of supply
A. I only
B. I, II and III
C. I and II
Explanation: The price elasticity of supply is always positive.

User Contributed Comments 5

User Comment
copus think of elasticities in terms of the slope of the SS and DD curves. The DD curve is negatively sloped and therefore the price elasticity of supply is negative. The SS curve is positively sloped and therefore the price elascticity of supply is positive.
srh011 You mean the price elasticity of demand is negative I think.
gill15 What if its a veblen good or giffen --- they have upward sloping demand curves

then price elasticity would not be negative

anybody
farhan92 @gill veblen good - p increase q increases therefore positive elasticity -thats how i see it anyway someone correct me if i am wrong here
jamcarr27 can elasticities not be equal to 0, therefore not negative?
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