Explain the significance of 'minus sign' attached to the measure of price elasticity of demand in case of a normal good, as compared to the 'plus sign' attached to the measure of price elasticity of supply.

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Solution

A minus sign is attached to the measure of price elasticity of demand in case of normal goods owing to the inverse relationship between price and quantity demanded of a normal good. However, a plus sign is attached to the measure of price elasticity of supply since there is always a direct relationship between price and quantity supplied of a good.

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