Rediculious... Elasticity question. its, computers, question, quantity

shootingstar

I’m confused with Price Elasticity, in a Schweser question I just did, they present an answer as negative and its got me rattled.
Suppose the price of computers increases from $1,000 to $1,200. Assuming the original quantity demanded for computers was 50 million units, and the new quantity demanded is 45 million computers, what is the price elasticity of demand, and is the demand for computers elastic or inelastic?
Delta % Q / Delta % P = [ (4550)/47.5 ] / [ (12001000) / 1100 ] = 0.1052 / 0.1818 = negative 0.5786. As I get this answer, I think this must become +0.5786 because elasticity must fit this criteria: elasticity between 01 = inelastic, elasticity of 1 is unitary, and elasticity 1 is elastic.
…why is Schweser telling me the answer is negative?
I made reference to p. 11 in Econ book aswell, and it even says right there take the absolute value of elasticity. Also check CFAI Volume 2, R13 Problems … q7 and it is very similar. Compute price elasticity when price of product X increases from $10 to $12, the quantity demanded declines from 30 to 28 unites.
calc is very simple, (2/29) / (2/11) = 0.689 / 0.1818 = |0.38| = 0.38 . CFAI doesn’t care that the price change was 6.89%, just that it was a 6.89% change, and that Delta % Q
Im certain Schweser has this wrong. Anyones thoughts are appreciated

kim226

price elasticity is always going to be negative as raising the price of a product should never increase demand as simple logic would suggest…
that said, I have also noticed that Schweser does not put much emphasis on using absolute values when dealing w/ price elasticity of demand. there is an example in the Schweser notes I have that computes it as a negative number…but analyzes it on an absolute value basis…?
just ignore + and  signs when dealing w/ these questions!

mfleming1983

agreed with 406analyst. just ignore the signs w elasticity… always negative because price up demand down.

Micholien

Except for wine.