Exercise I:

Given the demand and supply functions:

Pd = - 4Qd + 720

Ps = 2Qs + 120

1. Define profit at the equilibrium if per unit cost = 220 USD per ton of rice

2. Recall the demand function as follows:

Q = -0.5 Pi -0.25Pij + 0.25 In + 480

Where In = GDP per capita of Cambodian = 300 USD, Pi or Pe + Pij = 620 USD per ton, please determine the own-price elasticity, cross-price elasticity, and income elasticity at the equilibrium and formulate the policy implication.