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1. Ceteris paribus, assume an increase in the demand for electric cars has resulted in better living standards due to cleaner air.This has resulted in the government providing a 50 percent subsidy for all electric car manufacturers. Using demand and supply graphs illustrate and explain the impact on the equilibrium price and quantity in the market for electric cars? (There is more than one possible outcome)
2. In many countries, governments set the fares that taxi owners/drivers can charge.At various times, taxi owners/drivers stage protests asking for an increase in taxi fares because they believe it will increase their revenue. Graphically represent and explain what taxi owners/drivers are assuming about the price elasticity of demand for taxi rides?
3. Assume, with the arrest of many drug dealers, the police have been successful in reducing the number of drugs in the market. Using demand and supply graph(s) and the concept of price elasticity of demand, explain the difference in the impact on price and quantity of drugs between: an elastic demand curve for drugs and an inelastic demand curve for drugs.
4. The following is an abstract of an article published in Malaysia. PUTRAJAYA, Jan 24 The Domestic Trade and Consumer Affairs Ministry has announced a list of 13 goods, which will be price-controlled, in conjunction with the upcoming Chinese New Year celebration early next month...the retail prices for goods include live chicken at RM6.20 per kilo, standard chicken at RM7.50 per kilo, and super chicken at RM8.40 per kilo."All the goods on the list are in high demand during the festive season, hence the need for control to stabilise its price and supply on the market."We determined the maximum price of the goods based on several factors, including information gleaned from our monitoring activities nation-wide last year and this year, views of government agencies related to food production, and from discussions with stakeholders such as manufacturers, suppliers and retailers," Saifuddin said. (Source:https://www.malaymail.com/news/malaysia/2019/01/24/ministry-releases-cny-price- control-goods-list-effective-jan-30-to-feb-8/1716128) Use a suitable diagram to explain the maximum price set on the retail price of super chicken and Explain four possible problems of such an intervention.
5. Assume you are the owner of one of the only two coffee shop in town. Draw the game theory matrix and explain the strategy the coffee shops will use to maximise their payoff, if they were in competition with each other. Is this strategy optimum?Explain. Identify and state the strategies that you have in mind when constructing yourgame theory matrix.