Suppose the managers of Nature’s Garden believe that every 10 percent increase in the selling price of its apple-almond shampoo will result in a 15 percent decrease in the number of bottles of shampoo sold. Let’s calculate the price elasticity of demand.
For its strawberry glycerin soap, managers of Nature’s Garden believe that the company will experience a 20 percent decrease in unit sales if its price is increased by 10 percent.