.Answer the following questions efficiently.

Question 2 (28 marks) Suppose the following is the market condition for the market of cupcake. Qd = 900 - 20P, where Qd is the quantity demanded (in units) and P is the price (in dollar term). Qs = -600 + 30P, where Qs is the quantity supplied (in units). (a) Define market equilibrium. Calculate the equilibrium price and equilibrium quantity of the cupcake market. Show your workings. Round your answer in integers if applicable. (4 marks) Calculate the consumer surplus, the producer surplus and total surplus for the market of cupcake. Show your workings. Round your answer in integers if applicable. Is the market condition efficient at the equilibrium? Explain briefly with data support. (8 marks) U Suppose that all cake shops agree to charge $40 a cupcake. What is the quantity planned to exchange in the cupcake market? Calculate the NEW consumer surplus, producer surplus and total surplus respectively. Round your answer in integers if applicable. (7 marks) When comparing with the case in part (b), is the total surplus maximized in part (c) if all cake shops agree to charge $40 a cupcake? Is the market efficient under the condition of part (c)? Explain briefly with data support. (5 marks) Based on your calculation, can you explain why all cupcake shops choose to charge $40 a cupcake on their side? Which party or parties would bear the negative impact? Explain briefly with relevant data. (4 marks) Recommendation: Draw ONE diagram with all relevant data for your reference when you attempt parts (a) to (e). Include this diagram in your answer script though no mark is allocated to this diagram. It helps the marker to understand how you derive all the working steps. - END OF PAPER - Page 4 of 4must be newly drawn by hand. Mark penalty imposed if any of these instructions are NOT followed strictly. Question 1 (12 marks) Suppose the following is the demand equation of the famous flower shop, Brighten in Hong Kong and the current price charged by Brighten is $600 for a bunch of roses: Qd = 5000- 2P where P is the unit price of a bunch of roses and Qd is the quantity demanded (in bunch of roses) (a) Use the midpoint method to calculate the price elasticity of demand if Brighten decreases the unit price of a bunch of roses from $600 to $400. Show your workings. (Round your answer in two decimal places). (5 marks) (b) Identify the type of price elasticity of demand and explain briefly whether you support the price adjustment of Brighten based on your findings in (a) from the perspective of Brighten.(7 marks) Question 2 (28 marks) Suppose the following is the market condition for the market of cupcake. Qd = 900- 20P, where Qd is the quantity demanded (in units) and P is the price (in dollar term). Qs = -600 + 30P, where Qs is the quantity supplied (in units). (a) Define market equilibrium. Calculate the equilibrium price and equilibrium quantity of the cupcake market. Show your workings. Round your answer in integers if applicable. (4 marks)1. consider the following demand/supply schedules for cases of (24) Pepsi in a small city ... Price (P)$/case) Quantity demanded Quantity Supplied Surplus/shortage (Qs/month) (QS/Month) $10.00 0 1000 9.50 100 900 9.00 200 800 8.50 300 700 8.00 400 600 7.50 500 500 7.00 600 400 6.50 700 300 6.00 800 200 5.50 900 100 a) draw a diagram of the market for cases of Pepsi, including both the demand and supply curves bj what is the equilibrium price and quantity of Pepsi in this market? c) Fill in the surplus/shortage column on the right-hand side of the chart d) Suppose that grocery stores in this city are currently selling Pepsi for 58.50/case. What is the condition of the market at this price, and what adjustments will take place? Explain e) Suppose that each of the following changes take place, coteries paribus. For each change, draw a separate demand/supply diagram that illustrates how the equilibrium price and quantity will be affected... There is a decrease in the price of Pepsi, all else equal ii) There is a decrease in the price of Coca-Cola, all else equal ili) Consumer incomes increase, all else equal iv) Electricity prices increase for PepsiCo, the company that produces Pepsi. v) PepsiCo acquires new machinery that is able to can soft drinks more quickly f) Wing a written explanation and diagrams, explain the difference between a "Change in Quantity demand" and "a change in demand"Chapter 12 Understanding and Managing Start-Up, Fixed, and Variable Costs Being aware of the many costs associated with starting, running, and maintaining a business is crucial to the sustainability of the business. This chapter makes the student aware of the start-up costs, the many obvious costs, the possible surprise costs, and ways to keep up with these costs. The chapter puts these costs into categories of fixed and variable costs and demonstrates the proper accounting methods and systems that are universally accepted. Questions 1. Identify the investment required for business startup. :. Give an example of a business that you have observed lowering the price of a product. How do you think the business was able to reduce the price? a For a business you would like to start, estimate what you think the fixed and variable costs would be. Choose a category for each cost from USAIDIR: Utilities, Salaries, Advertising, Insurance, Depreciation, Interest, and Rent. Fixed Cost Amount Description Salaries Achorising Insurance Doprocution InBercall Unrapecine TOTAL 4 Explain three reasons to keep good records every day