1. (10marks)
2. Gasoline prices above $3 per gallon have affected what the Budget Rental
3. Co. can charge for various models of rental cars. SUVs are $37 for one- day rental and subcompacts are $41 for one-day rental. Why would the equilibrium rental charged on SYVs be lower than the equilibrium rental for subcompacts?
4. Evaluate the following quote:"Higher take-home wages for any group should increase the labour force participation rate for that group."
5. (10marks)JosephmigratedtoCanadafromGhana5yearsago.Hecurrently works in sales but is considering quitting work for two years to earn an MBA degree. His current job pays $40,000 per year (after taxes), but he could earn $55,000 per year (after taxes) if he had an MBA. Tuition is $10,000 per year, and the cost of an apartment near campus is equal to the $10,000 he is currently paying. His discount rate is 6 percent per year. He just turned 48 and plans to retire when he turns 60, whether or not he earns his MBA degree. Based on this information, should he go for an MBA degree? Explain carefully with appropriate calculations.
6. (20 marks) A company manufacturing medical personal protective equipment (PPE) in your province is regulated by the provincial government. The firm has total assets of $500,000. The revenue function for its output has been estimated as:
7. 2R (Q) = 250Q-$0.15Q .
8. The cost function is estimated as:
9. TC = $25,000 + $10Q
10. If the company were unregulated, what price would it charge, what output would it produce, what would its profit be, and what rate of return would it earn over its assets? What will be its marginal revenue at the unregulated price? (Note: You can obtain the inverse demand equation from the revenue function realizing that price equals revenue (R (Q) per unit).
11. Thefirmhasproposedchargingapriceof$100foreachunitofoutput.Ifthis price is charged, what will be the total profits and the rate of return earned on the firm's asset base?
12. The government has ordered the firm to charge a price that will provide the firm no more than a 10 percent return on its assets. What price should the firm charge, what output will be produced, and what dollar level of profits will be earned?

d. Using your results in part'a' above, calculate the price elasticity of demandfor this firm's product.Based on this result, calculate the marginal revenue and verify if you get the same result as you obtained in part'a'.

4. (15marks)Considermarketforagoodcharacterizedbythefollowinginverse demand and supply functions: PX= 10 2QXand PX= 2 + 2QX.

1. Compute the surplus received by consumers and producers.
2. Now suppose all manufacturers of this good are to pay a lump tax of $0.10
3. that will be used by the government regulators to defray some of the environmental cost imposed by this good's production. What will bethe new surplus received by consumers and producers?
4. Based on your results in part'b' above, how will you evaluate the impactof this tax policy on the society? Explain.