opti Question 3 2. Use the demand diagram below to answer this question. Note that P x Q equals $900 at every point on this demand curve. S 90 "..... . . .. .. . ..-- 60 .. 45 30 20 Demand 15 10 Q 10 15 20 30 45 60 90 Which of the following statements correctly describes own-price elasticity of demand, for this particular demand curve? I. Demand is unit elastic at a price of $30, and elastic at all prices greater than $30. II. Demand is unit elastic at a price of $30, and inelastic at all prices less than $30. III. Demand is unit elastic for all prices. a) I and II only. b) I only. C) I, II and III. d) III only.Exercise No2 (Managerial Economics) Question 1 Incidence of Tax As one example of demand and supply analysis, let us assume we have a product with the situation shown in the graph below. The price is $1.00 per unit. supply P = $1 Demand Q Now a sales tax is imposed. The tax is charged to the seller. For every $1.00 of sales, assume that the seller must pay $0.07 to the government. (Notice that consumers do not pay sales taxes. You have not paid any sales tax money to any government agency. The store pays the sales tax to the government.). What will happen to the cost of production? Do costs of production affect demand or supply? If any show such effect using demand and supply curve provided. What will happened to the price? Now assume that the demand for the product is perfectly inelastic. In this case, the demand curve is vertical. What will be the equilibrium price?Question 2 Use the demand curve diagram below to answer the following 6 4 2 D 12 16 Q What is the own-price elasticity of demand as price decreases from $8 per unit to $6 per unit? Use the mid-point formula in your calculation.Question 4 Consider the demand curve drawn below. 40 30 20 10 D . . ..... .. 5 10 15 Q 20 At which of the following prices and quantities is revenue maximized