Question 3 (LO2 & LO3) Suppose the demand for a product is given by Q=100-5P, where Q is quantity per year measured in kilogram and P is the price in AUD per kilogram. The supply curve for this product is given by Q=4P-8. Determine the equilibrium price? [5 marks] Calculate the elasticity of demand and supply at the equilibrium price. [5 marks] Suppose that the government imposes a floor price of A$15 and promises to buy any surplus (e.g., QS-QD) on the market. Determine the government expenditure of this policy [5 marks]. Instead of using the floor price, now the government imposes a A$3 tax on each kg sold, determine the market price after having this tax policy. [5 marks] Using the concepts of demand and supply elasticity, predict which party, the consumer or the seller, will generate a greater amount of tax revenue. [5 marks] Question 4 (LO2) Suppose Iran and Iraq both produce oil and olive oil. The table shows combinations of both goods that each country can produce in a day, measured in thousands of barrels. Iran: Oil Iran: Olive Oil Iraq: Oil Iraq: Olive Oil A ONHO OOO A NO ONAOOO OHNO a) Who has the comparative advantage in producing oil? Explain. [5 marks] b) Can these two countries gain from trading oil and olive oil? Explain. [5 marks]