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Presume that a department store is selling a popular brand of dress shirt for $109 each. Through 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.

(1) Compute the price elasticity of demand.

(2) Interpret your result. Specifically, what kind of demand elasticity is it and what does the coefficient of elasticity indicate when price went down?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91225871

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