a. At a local store, the initial price for nasi lemak is RM1.50 and at that price, 120 packets are demanded. If the price increases to RM1.80, the quantity demanded falls to 105 packets.

i) Calculate the arc price elasticity of demand for nasi lemak. (3 marks)

ii) Based on your answer, is the demand for nasi lemak elastic or inelastic? (1 mark)

iii) Based on your answer above, if the price of nasi lemak decreased by 10%, what will happen to the total revenues from nasi lemak? Carefully explain how you know. (3 marks)

iv) Assuming other factors are held constant, what are the factors that determine the price elasticity of demand of a good? Discuss three (3) of the factors. (6 marks)