Assume the price of a popular brand of ladies shoes was selling at $400.00per pair of shoes in a group ofstores in a week.At this price the stores sold100 pairs. Then the price of the shoe was reduced"buy one get one free". The sale resulted in an increase of quantity sold to 120pairs of shoes in a week in the same group of stores.

(a) Calculate the price elasticity of demand and interpret your results.

(b).Was the decision to put the shoe on sale correct. Why or why not?