5. The sales response function of a consumer durable for brand x is estimated to be

Qx = 50000-2Px+3Py+50Ax-20Ay

Where Qx=Sales in units of brand X

Px = Price of brand X = Rs 3000

Py = Price of brand Y = Rs 3500

Ax = No of advertising messages for brand X

Ay = No of advertising messages brand Y

The manufacturer of brand X decides to increase the advertising messages from the current level of 250 to 375. With the increase in number of messages for brand X it is expected that the number of messages for brand Y will also increase by the same number. Current advertising for Y is 500 messages. If the cost of production of brand X is Rs 1500 and the cost of an advertising message is Rs 250, how will the increase in advertising messages with regard to brand X affect the profits?

6. If the elasticity of demand and supply are 3 and 2 respectively. The government imposes a specific sales tax of Rs 25 per unit, what is the tax burden on the buyer

7.. A farm product has the following demand and supply functions.

Demand: Q = 13500 - 500P

Supply:Q = 3000 + 200P

Determine the equilibrium price and output under each of the following

situations:

i. Government imposes a specific sales tax at the rate of Rs 10 per unit.

ii. If the government imposes a sales tax at 10 percent of the value of the commodity