Q1. Block's sells 500 bottles of perfume a month when the price is $7. A huge increase in resource costs causes price to rise to $9 also Block's only manages to sell 460 bottles of perfume. The price elasticity of demand is:

Q2. For a developing country to grow it needs capital. The major source of capital in most countries is domestic savings but the goal of stimulating the domestic savings usually is in conflict with government policies aimed at reducing inequality in distribution of income.

1. Comment on this tradeoff between equity also growth.

2. Explain how would you go about resolving the matter if you were the president of a small poor county?