(b) Consider the supply function, Q=aP+b (a,b>0) (i) Find a general expression for the point elasticity of supply. (4 marks) (ii) Deduce that the supply function is unit elastic when b=0. (2 marks) (iii) Deduce that the supply function is inelastic when b> 0. (2 marks) (iv) Give a brief geometrical interpretation of your results in (ii) and (iii). (2 marks) Question 4 (20 marks) Increase A firm produces two commodities, 1 and 2. The demand functions are P=900-20-20 and P=1400-20-40, respectively, where P, the price of commodity 1 is, P is the price of commodity 2, Q1 is the quantity of commodity 1 and Q2 is the quantity of commodity 2. The costs are given by C = 7000+1000, +Q and C =10000+602, where C, is the cost of producing commodity 1 and C, is the cost of producing commodity 2. a) What is the relationship between the two commodities? Explain. (4 marks) b) Show that the firm's profit function is given by (Q,2)=-302-10022-4QQ2 +8000, +1400Q2-17000 (4 marks) c) Suppose the firm is required to produce a total of exactly 60 units of both Q1 and Q2. the quantities of Q1 and Q that would maximize the firm's profits. (12 marks)