(a) (i) Define the term cross price elasticity of demand and clearly explain its
value for substitutes and complementary commodities. (5 marks)

(ii) Use data in the table below to compute income elasticity through the
arc elasticity method:
Quantity Income (sh.) Price (sh.)
100 5000 16
120 6000 16
(2 marks)
(b) Discuss any three practical applications of the concept of elasticity of
demand in Management and economic policy decision making.
(6 marks)
(c) (i) The demand for a commodity is five units when the price is sh.1,000
per unit. When price per unit falls to sh.600, the demand rises to six units.
Compute the point and are arc elasticity. (4 marks)