1a Assume you are the Director of Marketing for Majjus Enterprise, a firm that produces a new product called African Solar. Your company sells to two distinct geographical markets-East Legon and Nima. Majjus Enterprise is described as a monopolist and has the possibility of discriminating between its East Legon and Nima Markets. In order to derive the maximum profit from the production process, you engaged the services of an Econometrician, who estimated the demand functions for both East Legon and Nima markets to be: Q1 = 24 - 0.2P1 East Legon Market Q2 = 10 - 0.05P2 Nima Market Where Q1 and Q2 are the respective quantities of African Solar demanded in the East Legon and Nima markets and P1 and P2 are their respective prices (in GH). If the Total Cost (TC) of Majjus Enterprise for producing African Solar for these two markets is given as TC = 35 + 40Q, where Q =Q1 +Q2. i. What profit will Majjus Enterprise make with and without price discrimination? (10 marks) ii. What business advice will you give in respect of practicing price discrimination or selling a uniform price? (1 mark) iii. If price discrimination is the option to implement within the context of elasticity of demand, what pricing policy should be implemented in each market to raise total revenue? (4 marks) Question 1b The economy of Ghana is made up of three sectors namely: Agriculture, Industry and Services. These three sectors contribute to the national output. For decades, prior to the 2000s, the Agricultural sector contributed the most to the national output. Sadly, in recent years however, the sector has been the least contributor to national output. Trends in production of major food crops such as maize, rice and sorghum show that on-farm productivity has stagnated and the exploitable difference between the actual and the potential output of most of the crops (yield gap) has widened. Low and inadequate levels of usage of productivity enhancing technologies such as quality seeds of improved varieties and fertilizer, inadequate extension services and weak market linkages contribute to the poor agricultural performance. It was against this background that the NPP-led government implemented one of her flagship programmes "Planting for Food and Jobs". The programme is primarily aimed at making subsidised improved seeds and fertilizers available to farmers, sensitising farmers on the adoption of good agronomic practices and the marketing of agricultural crops over an electronic agriculture platform. This programme is ultimately aimed at boosting crop yield. In addition, suppose that agricultural products in Ghana are normal goods and due to the implementation of good economic policies and the curtailing of corruption, the economy of Ghana grows significantly leading to appreciable increases in the general consumers' income levels. the aid of a diagram, explain the effect of these events on the equilibrium price and quantity of agricultural crops assuming that these events have equal impact. Question 2a In April 2020, there was shortage of Ghacem cement in the country which led to a rise in the price of Ghacem cement. The government then intended to put a price ceiling on cement in the country to minimize the loss to users of cement for construction purposes. Some people were of the view that "the fixing of a price ceiling for cement in the country will not have any effect". Briefly discuss with the aid of an appropriate diagram, the effect of the imposition of price ceiling on Ghacem cement in the market. After the imposition of the price ceiling (and initial market equilibrium), two events took place in the cement market. First, Ghacem Company Limited obtained an efficient technology of production which influenced supply of Ghacem cement. This was followed by the second event (after a year) where the prices of raw materials for Ghacem cement production increased. An economist trained in the University of Professional Studies, Accra is of the view that, the final equilibrium price, after the effect of the second event has been felt, can only be lower than the initial equilibrium price (that is when the two events have not occurred). Another economist trained in the University of Ghana, however, on the other hand thinks the final equilibrium price can only be higher than the initial equilibrium price. By using appropriate diagram(s) briefly explain who is right. If none of the two economists is right, what is your view? Question 2b Nyameye Company Limited is a new business established to produce blocks (in units). The demand function for blocks is given as 4 = 35 0.5. It has been estimated that the total fixed cost is GH80 and average variable cost function is 3 51 + 320, where Q is number of blocks produced and P is the price per block (in GH). Given this information, what is the total profit at the profit maximizing level of output, and what is the best pricing policy option? (5 Marks) Question 2c The Director of Jonat Enterprise hires labour (L) and rents capital equipment (K) in a competitive market to produce chocolate pellets. At the moment, the wage rate of labour is GH2 per hour and capital is rented at GH5 per hour. Also, the unit price of chocolate pellets is GH0.75 and total cost of production is GH1,000. Suppose the firm's production function (Q) follows a Cobb-Douglas specification given as: 0.5 0.5 =14 +10 Page 3 of 4 Determine the optimal input usage and the maximum profit that Jonat Enterprise would obtain at the optimal input levels. (5 Marks) Question 3 Question 3a Assume you are the Minister of Finance and Economic Planning for Ghana, in charge of Fiscal Policy. The Research Director of the Ministry brought you the following data on Ghana for the previous fiscal year, 2021. An examination of the data reveals that, during the fiscal year 2021, households in Ghana saved 20% of their disposable income (Yd) and spent the rest on consumption. In addition, GH5,000.00 was spent on Consumption expenditure (C), which is independent of income and Gross Private Investment (I) was GH7,000.00. Total Government expenditure (G) which stood at GH8,000.00 was supposed to be financed by a lump sum tax of GH2,000.00 (independent of income) and a proportional tax rate of 25% of national income. Exports (X) stood at GH2,500.00. In addition, the country's import (M) during the previous fiscal year comprises of GH1,000.00 which was independent of the country's national income and 10% which was dependent of the country's national income. Given these data on Ghana for the previous year: i. Compute the equilibrium level of income (Y), Consumption (C), Tax (T) and Savings (S). (Hint: = + ; = + and = + ) (10 marks) ii. Determine the Government fiscal stance. (1 mark) iii. If the full employment level of national income is GH40,000.00, determine the income gap. (1 mark) iv. What fiscal policy would be appropriate to address this gap? (1 mark) v. If there is an increase in export to GH4,000.00, find the new level of equilibrium income. (2 marks) vi. Show how a GH2,000 increase in government spending financed by a GH2,000 increase in taxes will affect the level of national income. (2 marks) Question 3b Gross Domestic Product (GDP) is not a good measure of welfare in an economy. Discuss