Final answer:
Price elasticity of demand is correctly interpreted as a negative number due to the inverse relationship between price and quantity demanded. Although negative, we commonly refer to it in absolute terms, such as saying 0.45 in reference to an elasticity of -0.45, indicating an inelastic demand.
Step-by-step explanation:
The statement that 'price elasticity is almost always a negative number due to the inverse relationship between price and volume' is true. Price elasticity of demand measures how much the quantity demanded of a good responds to a change in the price of that good, with the demand curve typically being downward sloping. This indicates that, along the demand curve, if the price changes by a certain percentage, the quantity demanded will change by a certain percentage in the opposite direction. Therefore, price elasticities of demand are negative numbers.
However, when discussing price elasticity, we conventionally cite the absolute value of the elasticity measure. For example, if the elasticity of demand between two points is calculated to be -0.45, this would suggest an inelastic demand over that interval, and by convention, we would express this as 0.45, acknowledging that it is in fact a negative number.
An example of this would be along a demand curve between two points, say B and A, where a 1% increase in price might result in a 0.45% decrease in the quantity demanded. Hence, a 10% increase in price leads to a 4.5% decrease in quantity demanded, illustrating the inelastic nature of the demand within this range.