QUESTION 1 A. Explain the concept of elasticity and show why it is critical in managerial economic decision making. (10 marks) B. The demand for Bachanal Cruise Line holiday cruise tickets, based on annual data, has been estimated as follows: Q = 12,000 8.4P + 0.25Y where Q is the number of tickets sold, P = price and Y =Income. IfP= $1,350 and Y = $18,000 i. Compute the point price elasticity of demand and interpret your result. _ (8 marks) ii. Find the point income elasticity of demand and interpret your result. (7 marks) C. The demand function for a monopolist rm is: Q = 8,600 .. 20P. Its total cost is made of total xed cost of 5,000 and total variable cost TVC = 130Q + um. i. Find the Price function. (3 marks) ii. Compute the profit maximizing quantity of the fu'm. {5 marks) iii. Find the corresponding price of the product. (3 marks) iv. Compute the level of prots at the prot maximizing level of output. (4 marks)