Q1. Elasticity of demand. (a) Write down the equation for a standard linear demand curve and sketch it (note that you can choose whatever numbers you like for the slope and intercept, but you might want to read the rest of the question before choosing). [2 marks] (b) Choose three points from the curve sketched in part a) and calculate the elasticity of demand at each point (you can choose any three points as long as they are not too closely bunched together). Show your calculations and indicate your chosen points on the sketch. [4 marks] (c) Which point on the curve you sketched in part a) is associated with revenue maximisation? Demonstrate visually. [4 marks] (d) What is the elasticity of demand at the point of revenue maximisation? Explain and provide intuition. [4 marks] (e) The (absolute value of the) elasticity of demand can go from zero to infinity. When considering the demand curve for an individual firm, which values of the elasticity of demand do you think are least likely to be maintained in equilibrium? Provide an explanation using both words and equations. [6 marks]