Q:1 Demand for Orange Juice is given as

Qd = 5000 - 2500 P + 1200 I + 650 E - 255 Ps

Suppose Income is I = Rs.500, Expectations E = 55, and Price of Ps = Rs 25.

a.Find the Demand Equation.

b.Using the demand function from part a.,

Calculate Elasticity of Demand for price range of Rs.125 and Rs.155.

c.What will be the 'Price Elasticity of Demand' at P = Rs.125?

d.Interpret the Elasticity of Demand calculated in (C) above.

Q:2

Assume Tea brands ChotooChai and BaraChai are competing brands in the market. With arrival of winter season, ChotooChai announces good promotional deals. Using 'Comparative Statics Analysis' of demand and supply model:

a.How will the managements of the two brands study the short-run and long-run impact on Tea Sales, after the announcement of promotions in the market of Tea?

b.Demonstrate and explain, with clearly labelled two panel diagrams, the 'Rationing Function'and the Allocating or 'Guiding Function' of Price.