QUESTION 1 [20 marks] a) The demand function for roses is Q=200-0.4p, and the supply function is Q=100+0.4p+0.5t, where p is the price of roses and t is the average temperature in a month. Show how the equilibrium price varies with temperature. [5 marks] b) The demand function for processed pork is Q = 100?P + 5Pb + Pc + 8Y and supply function for processed pork is Q = 50 + P?6Ph where Pb is the price of beef, Pc is the price of chicken, Ph is the price of hog and Y is the consumer income. Initial values are Pb=N$2, Pc=N$5, Y=N$100 and Ph=N$3. Draw the demand and supply curve for processed pork. [10 mark] c) Suppose the market for wheat is competitive, with an upward-sloping supply curve, a downward-sloping demand curve, and an equilibrium price of N$4.00 per kilogram. Why would a price of N$8.00 per kilogram and N$3.00 kilogram not be an equilibrium prices? [5 marks] QUESTION 2 [25 marks] a) Calculate and interpret the elasticity of demand for each of the following demand functions at point where price is N$12: i. P = 65 - 0.4Q [5 marks] ii. 4P + 2Q = 74 [5 marks] iii. Q = 60 - 0.5P [5 marks] iv. 5P = 120 - 3Q [5 marks] b) Is it true, as many people claim, that taxes assessed on producers are passed along to consumers?

QUESTION 3 [20 marks] a) True or false and explain. Illustrate with a graph where appropriate. i) Rent control for apartments creates surplus of rental apartments . [5 marks] ii) Since demand for agricultural products is inelastic, higher prices mean lower incomes for farmers. [5 marks] b) Use appropriate diagrams to discuss the relationship between: Total product of labour (TPL) and marginal product of labour and; Average product of labour and marginal product of labour. [10 marks] QUESTION 4 [15 marks] a) Use appropriate diagrams to discuss the effect of a quota ) on the equilibrium price and equilibrium quantity of maize in the local market. [15 marks]