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Why Is It Customary to Report Price Elasticity of Demand

question 14

Essay

Why is it customary to report price elasticity of demand in absolute value terms while cross elasticities and income elasticities are reported with their sign attached?


Definitions:

Cash Flows

The complete sum of funds flowing into and leaving a business, significantly impacting its liquidity.

Net Income

is the total earnings of a company after all expenses and taxes have been subtracted from total revenue; a key indicator of financial health.

Accrual Accounting

An accounting method where revenues and expenses are recorded when they are earned or incurred, regardless of when cash transactions occur.

Current Operating Liabilities

Short-term liabilities that are incurred as part of the normal operations of a business, due within a fiscal year.

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