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