Explain what price elasticity

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Historical data suggests that in the athletic shoe industry, the price elasticity for shoes is approximately -0.67.

1) Explain what price elasticity is, and how to interpret the stated elasticity for athletic shoes of -0.67.

2) Using the price of $100 and the quantity of 100,000 pairs, and the elasticity of -0.67, estimate the expected total unit sales if the shoes were offered at $125 per pair (show your work).

3) Estimate the price elasticity of this particular pair of shoes if the new price ($125 per pair) results in total sales of 95,000 pairs (show your work).

4) What effect would you expect the recent economic downturn to have on consumer price elasticity in general?

Reference no: EM13700866

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