Calculate the price elasticity of demand

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Reference no: EM133066142

You know that price elasticity of demand is calculated by dividing the percent change in quantity demanded by the percent change in the price of the good or service.

Assume that an over-the counter cold medicine is introduced in the market.

The medicine is sold in a pack of 100 caplets.

Initially, the manufacturer put the product on market for a price of $20 and seven stores in a district sold 100 packs in a week.

This prompted the manufacturer to offer a sale of 25% on the product.

As a result, the same seven stores of the district sold 140 packs in a week.

-Calculate the price elasticity of demand and interpret your results.

-Show the formula for your calculation.

Reference no: EM133066142

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