answer the questions

25. For a free market system, which of the following best answers the question, "What goods and services will be produced?" A. Only those goods whose long-term profits are greater than average B. Any good for which consumers are willing to pay a positive price C. Any good whose production is characterized by the least-cost technology D. Any good that returns its producers sufficient revenue to cover its total costs SECTION B. (25 MARKS) ANSWER ALL THE QUESTION. QUESTION 1 a) Define price elasticity of demand and indicate clearly the midpoint formula of the elasticity of demand. (3 marks) b) Suppose the price of local cable TV service increased from RM16.20 to RM19.80 and as a result the number of cable subscribers decreased from 224,000 to 176,000. Calculate the elasticity of demand and describe its elasticity. (4 marks) c) Using mid-point method, calculate the following elasticities: If the price elasticity of demand for a good is 0.4, how much will a 10 percent increase in price results in changes to quantity demanded? (4 marks) d) Using mid-point method, calculate the following elasticities : The quantity demanded for product A increases from 30 to 40 as the price of product B increases from RM 0.10 to RM 0.20. (4 marks) Given the following demand and supply equations: QD = 100 - 5P Qs = 10+ 5P Where Qo and Qs represent the quantities demanded and supplied respectively and P is the price: a) Determine the equilibrium price and quantity. (2 marks) b) If the government sets a minimum price of RM10 per unit, calculate how many units would be supplied and how many would be demanded. Explain the implication. (3 marks) c) If the government sets a maximum price of RM 5 per unit, calculate how many units would be supplied and how many would be demanded. Explain the implication. (3 marks) d) If the demand increases to Q= 200-5, determine the new price and quantity. (2 marks)