Answer to Question #71630 in Microeconomics for CHARLES ADONGO

Question

Suppose the product ploduced and sold lsi:k.; Alia Company Limited has a price elasticity of demand 9.170.7_ If the Manager wants to increase total revenue, what must be done to the price of the product? Explain_ (8 Marks) (b) Clearly distinizaish between. increasing and decreastri. g returns to scale. (6 Marks) • Explain the difference between producer surplus and consumer surplus_ (6 Marks) Ql_ Suppose the demand and supply functions for Sowbolobo are stated a fonovvs: QL:1— 128 +9P = 0 and 4:25 + .-7P=O = Where Os quantity demanded Os is quantit-i,' supplied and p is price. (a) Calculate the equilibrium price and quantity for the product_ (S Marks) (b) Assume. a tax of GH 05 is imposed on the product: what will. be the new equilibrium price and quantity? (6 Marks) (o) How much tax. revenue is the government doing to receive from the sale of scrxbolobo? (6 Ma rks)