Question: Practice problem 2 Consider the following demand and supply equations: P=20-5Q and P=10+2Q. (3 marks) (a).Draw a neatly labelled diagram showing the demand and supply

Practice problem 2 Consider the following demand and supply equations: P=20-5Q and P=10+2Q. (3 marks) (a).Draw a neatly labelled diagram showing the demand and supply curves. (3 marks) (b).Find the equilibrium level of price and quantity. (3 marks) Suppose this is the demand and supply of apples. List three factors that may change the demand for apples. Explain. List three factors that may change the supply for apples. Explain.(4 marks) (c)Suppose the price rises from the equilibrium level to 15. Calculate the price elasticity of demand and the price elasticity of supply in this range. (4 marks) (d).Comment on the value of PED and PES. Explain what we can say about the demand and supply of apples from the calculated elasticity values.(4 marks) As an apple seller, should you increase or decrease the price of apples to increase your revenue? (2 marks) (e).Calculate the consumer surplus and producer surplus in the apple market at equilibrium. (3 marks) (f).Bad harvest in parts of the world means that there is a fall in the supply of pears. What effect will this have on the market of apples? Explain with a diagram.(4 marks) (g).What happens to the consumer surplus and producer surplus in the apple market due to bad harvest of pears? (3 marks)

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