SECTION C: ANSWER ALL QUESTIONS IN THIS SECTION (50 marks) 1. Suppose you are the economic adviser of a company producing three brands of mobile phones; Nokia 10, Samsung X and iPhone Z. Suppose further that, your company currently sells 120 units of iPhone Z at $800 per unit, 150 units of Samsung X at $800 per unit and 200 units of Nokia 10 at #100 per unit, but in a bid to maximize profit, the company's managing director proposes an increase in price of Samsung X from $800 to @1000 per unit for which quantity demanded is anticipated to fall from 150 to 100 units; iPhone Z from $800 to @1200 per unit for which quantity demanded is anticipated to fall from 120 to 100 units; and Nokia 10 from $100 to #200 per unit for which quantity demanded is expected to fall from 200 to 100 units. i. Using the mid-point formula, compute the price elasticity of demand for each brand. (6 marks) ii. From your answer in i, what is the type and economic interpretation of each brand's value of elasticity. (4 marks) 2. i. Briefly explain any three key features of a Perfect Competitive and a Monopolistic market (6 marks) ii. Show what happens to a monopoly firm operating in the long-run. (4 marks) 3. Provide short answer for the following. i. Is the demand for table salt elastic or inelastic? Why? (2 marks) ii. Is the demand for stereos elastic or inelastic? Why? (2 marks) iii. Why is it that the production possibilities curve is bowed outward? (2 marks) iv. Why has the government placed price floors on some agricultural goods? (2 marks) V . Income effect of a price change. (2 marks) vi. Market failure. (2 marks) vii. Externality. (2 marks) viii. Substitution effect of a price change. (2 marks) ix. Diminishing marginal utility. (2 marks) X. Indifference curve? (2 marks) 4. Derive the MU function from the following TU function: TU = 200Q - 25Q2 + Q3