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Question 1. Due to the COVID-19, the price of hand-sanitizer increases from 150 taka to 250 taka. In response, the quantity demanded declines from 20 units to 15 units. (a) Calculate the price elasticity of demand. (5) (b) Explain if the demand is elastic or inelastic. Based on the elasticity, what change (increase, decrease, or keep it the same) in price the seller can do to maximize his total revenue? Explain your answer. (5 ) Question 2. The price elasticity of demand is inelastic for Mobile Phones and elastic for Play-stations. Suppose that technological advance doubles the supply of both products (that is, the quantity supplied at each price is twice what it was). a. What happens to the equilibrium price and quantity in each market? Use a supply-and-demand graph for both Mobile Phones and Play-stations and analyze which product experiences a larger change in price and which product experiences a larger change in quantity. (5) b. What happens to total revenue for each product? Briefly explain. (5) Question 3: Suppose oil prices rise sharply for years as a result of war in the Persian Gulf region. What happens and why to the demand for each of the following? a. gas-guzzling SUVs (5) b. Coal c. Tires Question 4: The table below shows the maximum number of Pithas or Pizzas that Ayesha and Alina can cook in 1 hour. (a) Fill in the rest of the table with the opportunity cost of Pitha and Pizza for each person. (5) Person Maximum Maximum Opportunity Opportunity Pithas Pizza Cost of Cost of 1 Pitha Pizza Ayesha 60 120 0.5 Alina 100 150 1.5 (b) Identify who has a comparative advantage in producing each good, and why. (5) (c) What is the total production of Pitha and Pizza if they specialize according to their comparative advantage? (5) Question 5: Eighty percent of all navel oranges grown in the US come from California. In the winter of 1998 a series of storms in California damaged about 70% of the navel orange crop. Explain how this severe weather most likely impacted each of the following markets: a. California-grown navel oranges (5) b. Imported navel oranges (5) c. Commercially prepared fruit salad (that contained navel oranges) (5) Question 6: Consider a market for Lemonade. Please use the accompanying graph to answer following questions. P is the price of Lemonade and Q is the quantity of Lemonade. 16 > Q (a) What is the equilibrium price and equilibrium quantity of Lemonade in the market? (5) (b) Calculate the consumer surplus and producer surplus at the equilibrium quantity