Q.
a) Illustrate how prices are determined by the free forces if demand and supply. (5 marks)
b) Show the different types of elasticity of demand. (5 marks)
c) Necessities tend to be inelastic in demand whereas luxuries tend to be elastic. Explain. (10 marks)
(20 marks, 2014 Q2)
A.
a) Earlier post with graphic explanation is available here.
b) Different types of elasticity are discussed here in earlier post.
c) Necessities versus luxuries are compared and contrast in earlier post here.
Ref:
Own account.