The demand and supply schedules for carrots in a certain market are given
below:
Price per
ton
(Sh „000‟)
Quantity demanded per
month
(Thousands of tons)
Quantity supplied per
month
(Thousands of tons)
2 110.0 5.0
4 90.0 46.0
8 67.5 100.0
10 62.5 115.0
12 60.0 122.5
Determine the equilibrium quantity and price by graphical method.
(12 marks)
(c ) Explain how the concept of elasticity guides decisions in the following
situations:
(i) Government‟s tax policy on household consumption. (4
marks)
(ii) Devaluation policy to encourage exports and discourage imports.
(4 marks)
(iii) Price discrimination by a monopolist. (4 marks)