Question
A. You have been appointed the new manager for Ghana Airways Company Limited, an international airline company that flies from the Kotoka International Airport in
A. You have been appointed the new manager for Ghana Airways Company Limited, an international airline company that flies from the Kotoka International Airport in Accra to Heathrow Airport in London every day. The airline is described as a monopolist and has the possibility of discriminating between its Business and Economy Travelers. To help you price your services appropriately to maximize profit, you engaged an economist who estimated the demand function for both Economy and Business Travelers as: Q1 = 24 0.2P1 Economy Travelers Q2 = 10 0.05P2 Business Travelers Where Q1 and Q2 are the respective numbers of Economy and Business Travelers and P1 and P2 are their respective fares (in GH). If the Total Cost (TC) of this airline company for flying these two categories of travelers is given as TC = 35 + 40Q, where Q = Q1 + Q2 What can you say about the fares, number of travelers and profit of Ghana Airways Company Limited, with and without discrimination? (10 marks) B. 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, thin extension services and weak market linkages contributes 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 subsidized improved seeds and fertilizers available to farmers, sensitizing farmers on the adoption of good agronomic practices and the marketing of agriculture 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. With 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. (5 M
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