Question 1:

a) Explain clearly the three concepts of elasticity of demand.

b) Using these concepts, explain and comment on the strategies you would recommend for increasing the revenue of a typical small business in your country. You may consider the case of a mini supermarket.

Question 2:

a) What are the characteristics of a perfectly competitive market?

b) Supposing that a perfectly competitive industry became a monopoly, what changes would you expect to see in:

1) the price of the industry's good,
2) the output of the industry's good.

c) What are the major sources of market imperfection in the real world?