1.Explain the relationship between the total revenue of a firm and the price elasticity of demand for price reduction.

2.Explain the importance of the concept of cross elasticity of demand in a) formulating proper price strategy by a firm (b) in analyzing the degree of competition prevailing in an industry

3.QD=50 -2 P + 0.5 PR and Qs = -4 + P. Here PR if the price of a related good.

a.What is the equilibrium price and quantity if PR =Rs. 10?

b.Plot the demand and supply curve and show the equilibrium in the same plot.

c.If govt. imposes tax on the related good by Rs.2 per unit, then how the equilibrium will change?

d.Do buyers of the commodity bear the whole burden of the excise duty?

4.Let the market supply and demand curves are given by the equations

P = 40 + 4Qs and P= 100 - 2Qd. What is the consumer and producer surplus at the equilibrium price and quantity?