(I)Draw a supply and demand diagram to illustrate the effect of an increase

in income on equilibrium price and quantity traded for an inferior good. [5 marks]

(ii)Discuss how knowledge of price elasticity and income elasticity might be

of practical use to a firm dealing in the sales of mobile phones in deciding

on its revenue strategy. [10 marks]

(iii)What is meant by the "profit maximising rule"? [2 marks]

(iv)Using appropriate examples, explain the concepts of price elasticity, income

elasticity and cross elasticity of demand. [10 marks]

(v) Discuss how knowledge of price elasticity, income elasticity, and cross elasticity

might be of practical use to a firm dealing in sales of smart phones. [15 marks]