Positive Price Elasticity of Demand

An Positive Price Elasticity of Demand is a price elasticity of demand that is a positive elasticity value.

• Context:
  • It can (typically) be an Atypical Value.
  • It can occur for Economic Items where consumers predict quality based on item price.
• Example(s):
  • For caviar, sometimes a price increase can spur a product demand increase..
  • For physicians, sometimes a wage increase can spur a labor demand increase..
  • …
• Counter-Example(s):
  • a Negative Price Elasticity.
  • a Positive Elasticity of Labor Demand.
  • a Positive Income Elasticity of Demand.
  • a Positive Price Elasticity of Supply.
• See: Price Elasticity Curve, Law of Demand.

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References

2014

• (Wikipedia, 2014) ⇒ http://en.wikipedia.org/wiki/Price_elasticity_of_demand Retrieved:2014-11-29.
  • … In general, the demand for a good is said to be inelastic (or relatively inelastic) when the PED is less than one (in absolute value): that is, changes in price have a relatively small effect on the quantity of the good demanded. The demand for a good is said to be elastic (or relatively elastic) when its PED is greater than one (in absolute value): that is, changes in price have a relatively large effect on the quantity of a good demanded. Revenue is maximized when price is set so that the PED is exactly one.

1970

• (Feldstein, 1970) = Martin S. Feldstein. (1970). “The rising price of physician's services.” In: The Review of Economics and Statistics.
  • QUOTE: … 'A positive price elasticity could be explained in Veblenesque terms or by assuming that patients assess quality by price if the estimates were based on a cross section of doctors; no such explanation is possible for the current aggre- gate data. …

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