Economics - Reflective Assessment 1

QUESTION 8

1. Use demand and supply graph(s) and the price elasticity of demand concept; explain why an arrest of drug dealers that results in a 50 percent reduction in the supply of heroin will increase the total revenue of the remaining Heroin dealers in the market.  2 Marks
2. If you owned a business, how will you apply your understanding of price elasticity of demand in your pricing policy? Use a numerical example in your answer  2 Marks