Price elasticity of demand for the two good $X$ and $Y$ are zero and $(-) 1$ respectively. Which of the two is more elastic and why?

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Solution

Good-Y is more price elastic because percentage change in quantity demanded is more responsive to a given percentage change in price in the case of Good-Y than in the case of Good-X. Negative sign (as a prefix to the price elasticity of demand) only signifies the inverse relationship between price and quantity demanded of a commodity.

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