1)Can price elasticity of demand be negative?

2)What is the reason why the demand curve slopes downward to the right?

3)Should Procter and Gamble use reward or loyalty programs to influence demand and price elasticity for its products?

1)A demand curve shows the negative relationship between the price of the commodity and its quantity demanded. It means that as the price of the commodity increases, its quantity demanded decreases, and vice-versa. This shows that the price and quantity always go in the opposite direction. As the price falls, the quantity demanded rises. Hence, the price elasticity of demand is always negative. Negative elasticity represents the law of demand, i.e. the relation between the price and quantity demanded of the commodity.

2)The inverse relationship between price and the quantity demanded exists for two reasons. The first reason is the substitution effect, which states that as the price of a good goes up, it becomes relatively more expensive than substitute products (ie apples vs. oranges), people will purchase less of that good and more of the substitutes. The opposite also holds for when price decreases. The second reason for the relationship is the income effect, which states that as the price goes up, purchasing the same amount of that product will make up a larger portion of your budget, so you will reduce consumption of that product.

3)Reward and loyalty programs are marketing strategies that can be used to make short and long-term ties with customers. Such schemes involve providing gifts, coupons, discounts and other rewards that attract demand for the company?s product. It increases the demand and will make the demand more price inelastic for the company as the company will have a relatively large market share.