Question: (a) Basic Economics problem is all about scarcity, rational choices and opportunity cost. Explain how these concepts are relevant to a business.[8 marks] (b) (i)

(a) Basic Economics problem is all about scarcity, rational choices and opportunity

cost. Explain how these concepts are relevant to a business.[8 marks]

(b) (i) Identify any five determinants of the demand for a good of your own choice in Mauritius. [5 marks]

(ii) Draw a supply and demand diagram to illustrate the effect of an increase in income on equilibrium price and quantity traded for an inferior good. [5 marks]

(iii) Discuss how knowledge of price elasticity and income elasticity might be

of practical use to a firm dealing in the sales of mobile phones in deciding on its revenue strategy.

[10 marks]

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