1. The following is a demand schedule for RJ Guitars. Construct the demand curve.

Price Quantity Demanded

P4,000 2

P3,500 6

P3,000 10

P2,500 14

P2,000 18

2.Because of a typhoon in the city, the price of cabbages rose from P60.00 to P80.00, and the quantity demanded falls from 150 kilos to 100 kilos.

a.Compute for the price elasticity for this price range.

b.What is the interpretation of this price elasticity of demand?

c. What happens to the total revenue of sellers when the price of cabbages increases?

3.The following table shows the daily quantity sold for two (2) products in Brigg's Warehouse according to the average income of customers.

Quantity demanded if income is P15,000 Quantity demanded if income is P25,000

Product A 20 15

product B 12 18

a.Calculate and interpret the income elasticity for Product B, if a customer's income changes from P15,000 to P25,000. (10 points for the solution, 5 points for interpretation)

b.Calculate and interpret the income elasticity for Product A, if another customer's income changes from P15,000 to P25,000. (10 points for the solution, 5 points for interpretation)