Rijo John has tried to estimate own and cross price elasticities for tobacco products in India....

Rijo John has tried to estimate own and cross price elasticities for tobacco products in India. His findings for own price elasticities are reported in the table below.

	Bidis	Cigarettes
Rural	0.91	0.41
Urban	0.87	0.17

a. Compare the demand for bidis and Cigarettes in rural and urban areas.

b. Draw neat diagrams for i) Demand Curve ii) Supply Curve iii) demand elasticity iv) degrees of demand elasticity.

c. The demand for a product priced Rs. 10/unit and Rs. 8/unit is 200 and 400 units respectively. Compute the point and arc elasticities (with diagram).

Expert Solution

Rahul Sunny answered 2 years ago

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