Suppose that your demand schedule for Rooh-Afza Drink is as follows: PRICE (In Rs.) Quantity Demanded

(Income = Rs.10,000)

Quantity Demanded

(Income = Rs.12,000)

8 40 50

10 32 45

12 24 30

14 16 20

16 8 12

Use midpoint method to calculate your price elasticity of demand as the price of Rooh-

Afza increases from Rs.8 to Rs. 10

a. When your income is Rs. 10,000

b. When your income is Rs. 12,000

b) Calculate your income elasticity of demand

a. If price is Rs. 12

b. If price is Rs. 16

10. problems and applications q10 a market is described by the following supply-and-demand curves: qsqs = = 2p2p qdqd = = 300â’p300â’p the equilibrium price is $ and the equilibrium quantity is . suppose the government imposes a price ceiling of $90. this price ceiling is , and the market price will be $ . the quantity supplied will be , and the quantity demanded will be . therefore, a price ceiling of $90 will result in . suppose the government imposes a price floor of $90. this price floor is , and the market price will be $ . the quantity supplied will be and the quantity demanded will be . therefore, a price floor of $90 will result in . instead of a price control, the government levies a tax on producers of $30. as a result, the new supply curve is: qsqs = = 2(pâ’30)2pâ’30 with this tax, the market price will be $ , the quantity supplied will be , and the quantity demanded will be . the passage of such tax will result in .