Final answer:
The price elasticity of demand is always negative because price and quantity demanded move in opposite directions. It is usually reported as an absolute value to avoid confusion.
Step-by-step explanation:
The price elasticity of demand will always be preceded by a negative sign. This is because the price of a good or service and the quantity demanded move in opposite directions. When prices rise, the quantity demanded tends to fall, and vice versa, leading to a negative relationship between the two. The absolute value of the elasticity is usually reported to avoid the confusion that might arise from the negative sign. There are three categories of elasticity: elastic, inelastic, and unitary. An elastic demand refers to a situation where the elasticity is greater than one, which indicates a high responsiveness of quantity demanded to changes in price. Inelastic demand corresponds to an elasticity less than one where changes in price have a low impact on the quantity demanded. Unitary elasticity is when the elasticity is exactly one, signifying proportional responsiveness of demand to price changes.