SECTION A (COMPULSORY) Question 1(a) AFB Company Ltd is a company that was set up in June 2020 that produces an alcohol drink known BedRock Bitters. Among the competitors of your product are Alomo Bitters from Kasapreko Company Ltd. As an expert in the marketing of alcoholic drinks, you have been poached from Kaspreko to oversee the marketing of this new product. In order for you to make informed decision and advise the board appropriately, you engaged an economist who estimated the demand equation for your firm's product. The economist used data from 857 consumers around the country for the month of January 2021 to estimate a linear regression for your product Variable Parameter Estimates Standard error Intercept 204 20.3402 Price of BedRock Biters per bottle (P.) -2.50 1.3534 Price of Alomo Bitters per bottle (P) 1.25 0.2629 Per capita Income (1) -0.20 O $212 Advertising (A) 0.06 0.0224 R-squared Adjusted R.squared F-statistic 0.9219 0.8947 7.8394 s In addition, the economist also estimated the supply function for your product as 0:= -85+5SP, - 1.5P+0.05E where P la the price of BedRock Bitters per bottle is the per unit prike of skilled laher, and Ei litres of them wed. Now suppose 2 beetles of Bedleck Bites is seld for GH 60, a bottle of Alomo Bitters is sold for GH40, the per capita income of consumers is GHc800, the company spends GH1.000 on advertising the per unit price of unskilled labour is Ghes, and a total of 1000 litres of ethanol was used for the production Write down the estimated demand equation for your firm's product I mark Interpret the coefficient of price of BedRock Bitters and Price of Alomo Bimers mark . Determine the quantity of BedRock Bitters bought by consumers 1 mark iv. Estimate the own price elasticity of demand and state the type of demand curve your firm has? 2 marks . What would be the firm's price policy option! vi Assess the probable impact on your firm if the Kasapreko increases the price of Alomo Bitters by 15% 2 marks i. What is the relationship between BedRock Biters and Alomo Bitter 1 mark V. Find the demand and supply curves for BedRock Bers 2 marks Ix Determine the equilibrium price and quantity for BedRock Bitters 2 marks * Suppose the government impresa txor GHe on every BedRock Bitters sold, what will be the new equilibrium price and quantity 2 marks a Represent the demand curve, old and new supply curves on a graph and find the deadweight loss S marks