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In this question, consider a restaurant that may or may not satisfy some food hygiene

standard. It is known that 4 out of 10 restaurants of this type satisfy said standard.

The restaurant’s profit is a function of potential customers’ beliefs: we assume that

the restaurant makes a profit of £0 if customers attach less than probability 4/5 to the

standard being satisfied, and a profit of £500 otherwise.

A food hygiene agency has been commissioned to inspect the restaurant. The agency

can either deliver a pass certificate or no certificate.

(a) Assuming that the director of the food hygiene agency has aligned interests with

the restaurant’s owner, what rule should the agency follow when deciding whether

or not to deliver a pass certificate to the restaurant? Justify your answer by framing

the problem as a basic information design problem.

A feasibility study shows that a fixed capital investment of P10,000,000 is required for a

proposed construction firm and an estimated working capital of P2,000,000. Annual

depreciation is estimated to be 12% of the fixed capital investment. Determine the rate

of return on the total investment if the annual profit is P3,500,000.

Given Q = 700 - 2P + 0.02Y where P = 25, and Y = 5000

(a) Calculate price of elasticity of demand and interpret the values

(b) Calculate the income elasticity of demand and interpret the value in relation

to the product.

Examine the statement the Eskom losses momentum

Explain how floating exchange rate is determined.(8mrks)

Analytically discuss a theory that describes contemporary international trade

during which step of the planning process would alternative plans be developed