1. Assume, with the arrest of heroin dealers, the police have been successful in reducing the amount of heroin in the market.Use demand and supply graph(s) and the concept of the price elasticity of demand; explain the impact on the price, quantity and total revenue if the:

i. Demand curve for heroin is elastic.

ii. Demand curve for heroin is inelastic.

2 If you owned a business, explain how you will apply the concept of price elasticity of demand when setting price.