L Section B - Short Answer Questions. Answer all questions. 13. Assume the market demand for wheat may be written as: 11. Suppose the market for potatoes can be expressed as follows: Q=45-2Pw + 0.3Y + 1P Supply: =-20 + 10p where Y refers to income and Pl refers to the price of barley. Assuming that wheat and Demand: =400 - 20p barley both sell for $1, and income is $20, calculate the price elasticity, cross-price elasticity and income elasticity for wheat. Solve for the equilibrium price and quantity. (6 marks) (4 marks) 14. Suppose the market for grass seed can be expressed as: 12. Suppose that the supply and demand of wheat depend on the price of wheat (p), the amount of annual rainfall (), and the level of disposable consumer income (). The Demand: Q. = 100 - 2p equations describing the supply and demand curves are given by: Supply: 0; = 3p 0, = 20r + 100p If government imposes a $5 specific tax to be collected from sellers, what is the price On = 4000 - 100p + 101 consumers will pay? How much tax revenue is collected? What fraction is paid by sellers? Sketch a graph of the supply and demand curves for wheat and show the effects of an increase in the quantity of rainfall. How does each curve shift (if at all) from the increase (5 marks) in rainfall? What does this shift do to the equilibrium price and quantity (increase/decrease)