1. (a) Qd = 10 - 4P and Qs = -2+8P. Solve for equilibrium price and quantity demand and supplied at equilibrium price. Now assume that government regulates the price through floor price to be Taka 1.5, show the impact of this price control on demand and supply. Do you support this type of intervention? [4]
2. (b) Define elasticity. The R.J. Smith Corporation is a publisher of romance novels-nothing exotic or erotic - just stories of common people falling in and out of fascination. The corporation hires you as an economist to determine the demand of its product. After months of hard work and submission of an exorbitant bill, you suggest the company that the demand for the firm's novels (Q_x) is given by the following equation: