Suppose that a department store is selling a popular brand of dress shirt for $109 each. During the first two weeks, the store sold 100 shirts, and in order to boost sale and clear the isles for new product, it declared a sale "buy one get one free". This resulted in sale of 500 shirts in one week, and the isles were cleared.

(a). Calculate the price elasticity of demand.

(b). Interpret your result. Specifically, what type of demand elasticity is it and what does the co-efficient of elasticity indicate when price went down?

Answer rating: 100% (QA)

PriceOLD109 PriceNEW1092 545 QDemandOLD100 QDemandNEW500 To calculate the price elasticity we need t... View the full answer