(b) Identify any five determinants of the demand for mobile phones in

Mauritius.
[5 marks]

(c) The following table refers to the demand and supply conditions of beef in a
given market in a given period of time.

Use the information above to plot a fully labeled diagram of demand and supply
curves and clearly indicate the equilibrium price and quantity of beef.
[5 marks]

(d) Describe 2 factors that would cause the demand curve for beef to shift to the
right. [4 marks]

(e) Examine the effects of government intervention on the market through the
imposition of the following:
(i) a maximum price
(ii) a minimum price
[10 marks]

Question 2

(a) Explain the concepts of price elasticity, income elasticity and cross elasticity of
demand. (10 marks)
(b) Discuss how knowledge of price elasticity, income elasticity, and cross
elasticity might be of practical use to a firm dealing in sales of mobile
phones. (15 marks)

[Total: 25 marks]
(c) Calculate and interpret the following elasticities:

i. A firm increases the price of product A, from Rs. 0.50 to Rs. 0.60,
quantity demanded falls from 1000 units a week, to 900 units a week.
What is the price elasticity of demand of the product?

ii. As a result of an increase in annual income from Rs 2000 to Rs 2400, a

man’s expenditure on housing goes up by 20%. Calculate the income
elasticity of housing.

iii. After a devastating drought in the rural province of Brazil, the price of
coffee rose from Rs 100 to Rs 150 per tones. This led to a rise in the
quantity demanded for tea in Brazil from 1000 to 2000 tones per month.
Calculate the cross elasticity of demand for tea.
[3 x 3 marks]
(d) If the demand for product A is given by:

QA = 20 – 1.5PA +PB + 0.4Y

Where PA is the price of good A, PB is the price of good B and QA is the quantity
demanded for good A and Y is income.
Suppose PA = 50, PB = 25, and Y = 500, calculate and interpret:

(i) the price elasticity of demand [3 marks]

(ii) the cross price elasticity of demand [3 marks]

(iii) the income elasticity of demand. [3 marks]

(e) Given that the demand and supply curves for a product are as follows:
Where P is price, D is quantity demanded and S is quantity supplied. Suppose
the government imposes a maximum price of 50, calculate the resulting shortage
or surplus and explain how the government may be able to maintain the price at
50.
[3 marks]

(f) Use a fully labeled diagram of the market demand and market supply curve
to illustrate the effect of an increase in the cost of a digital color generator (an
input in the manufacturing process) in the market for Plasma TV sets. [5 marks]

Question 1

(a) Economics is all about scarcity, choice and opportunity cost. Explain these
concepts using the Production Possibility Curve (PPC). [9 marks]

(b) Identify any five determinants of the demand for mobile phones in Mauritius.
[5 marks]

(c) The following table refers to the demand and supply conditions of beef in a
given market in a given period of time.

Use the information above to plot a fully labeled diagram of demand and supply
curves and clearly indicate the equilibrium price and quantity of beef.
[5 marks]
(d) Describe 2 factors that would cause the demand curve for beef to shift to the
right. [4 marks]

(e) Examine the effects of government intervention on the market through the
imposition of the following:
(i) a maximum price
(ii) a minimum price
[10 marks]

Question 2

(a) Explain the concepts of price elasticity, income elasticity and cross elasticity of
demand. (10 marks)
(b) Discuss how knowledge of price elasticity, income elasticity, and cross
elasticity might be of practical use to a firm dealing in sales of mobile
phones. (15 marks)

[Total: 25 marks]

(c) Calculate and interpret the following elasticities:

iv. A firm increases the price of product A, from Rs. 0.50 to Rs. 0.60,
quantity demanded falls from 1000 units a week, to 900 units a week.
What is the price elasticity of demand of the product?

v. As a result of an increase in annual income from Rs 2000 to Rs 2400, a

man’s expenditure on housing goes up by 20%. Calculate the income
elasticity of housing.

vi. After a devastating drought in the rural province of Brazil, the price of
coffee rose from Rs 100 to Rs 150 per tones. This led to a rise in the
quantity demanded for tea in Brazil from 1000 to 2000 tones per month.
Calculate the cross elasticity of demand for tea.
[3 x 3 marks]
(d) If the demand for product A is given by:

QA = 20 – 1.5PA +PB + 0.4Y

Where PA is the price of good A, PB is the price of good B and QA is the quantity
demanded for good A and Y is income.
Suppose PA = 50, PB = 25, and Y = 500, calculate and interpret:

(iv) the price elasticity of demand [3 marks]

(v) the cross price elasticity of demand [3 marks]

(vi) the income elasticity of demand. [3 marks]

(e) Given that the demand and supply curves for a product are as follows:

Where P is price, D is quantity demanded and S is quantity supplied. Suppose

the government imposes a maximum price of 50, calculate the resulting shortage
or surplus and explain how the government may be able to maintain the price at
50.
[3 marks]

(f) Use a fully labeled diagram of the market demand and market supply curve
to illustrate the effect of an increase in the cost of a digital color generator (an
input in the manufacturing process) in the market for Plasma TV sets. [5 marks]