1. Igloo and Polar are two leading ice cream manufacturers in Bangladesh. The table below shows how many liters of strawberry ice cream and Butterscotch ice cream each company produce per hour. Igloo Polar Strawberry ice cream Butterscotch ice cream 20 16 10 8 a) Who has absolute advantage? Explain with reasons. (3) b) Which company has the comparative advantage in producing butterscotch ice cream? Explain briefly. (3) c) Which company has the comparative advantage in producing strawberry ice cream? Explain briefly (3) Price ($) 2. The market for pizza has the following demand and supply schedules: Quantity Demanded Quantity Supplied 4 135 26 5 104 53 6 81 81 7 68 98 8 53 110 9 39 121 a. Graph the demand and supply curves. What is the equilibrium price and quantity in this market? (1) b. If the actual price in this market were above the equilibrium price, what would drive the market toward the equilibrium? (2) c. If the actual price in this market were below the equilibrium price, what would drive the market toward the equilibrium? (2) 3. Suppose that the market for milk can be represented by the following equations: Demand: P 12 -0.5QD Supply: P 0.1QS where P is the price per gallon, and Q represents quantity of milk, represented in millions of gallons of milk consumed per day. a) Calculate the equilibrium price and quantity of milk. (4) b) The government sets a tax of $0.50 per gallon of milk. What is the new quantity of milk sold in the marketplace? (2) c) Illustrate your answers to (a) and (b) on a graph. Using this graph, calculate how the consumer surplus and producer surplus change after the price change. Also calculate any deadweight loss that results. (3) 4. Suppose the demand and supply functions of laptops are given by: P-100-8Qd and P=68-4Qs. Calculate the equilibrium price and quantity. Calculate PED if equilibrium price rises by 10%. Mention whether the product has elastic or inelastic demand. (5) 5. A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of $10, average total cost of $8, and fixed costs of $200. a) What is its profit? (2) b) What is its marginal cost? (1) c) What is its average variable cost? (1) d) Is the efficient scale of the firm more than, less than, or exactly 100 units? (2) 6. Banglar rannaghor is a catering company operating in a perfectly competitive industry. The company has a fixed cost of 200 taka. The table below represents the variable cost associated with each level of output. Quantity of meals 0 Variable Cost (Taka) 1 2 3 4 5 0 2000 3000 4800 7000 10000 a) Calculate the total cost, average variable cost, average total cost, and marginal cost for each quantity of output. (4) b) What is the break-even point? What is the shutdown point? (2)