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Country Z produces and consumes only two products: rice and wheat. The price elasticity of demand of rice is ?? = ?0.2 = 0.2 and

Country Z produces and consumes only two products: rice and wheat. The price elasticity of demand of

rice is ?? = ?0.2 = 0.2 and the price elasticity of demand of wheat is ?? = ?1.2 = 1.2

a) What information can we obtain about the preferences of buyers of country Z from the given price

elasticities of demand? Discuss briefly.

b) Note: the following question is similar to the example we saw last Saturday (29 September).

The government of country Z needs a significant amount of fund to tackle the current coronavirus

situation. To obtain the fund, they have decided to impose a $ 5 tax on either the sellers of rice or the

sellers of wheat. Currently, both the equilibrium prices of wheat and rice are $20 per unit respectively.

The equilibrium quantities of wheat and rice are 10,000 units (per day) respectively.

As the economic advisor of country Z, what would you advise the government of country Z. Which

product should they tax to obtain the fund to tackle the coronavirus situation? Discuss in detail using the

Model of Demand and Supply (graphs).

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gm; (1+8=9marksi Country 2 produces and consumes only two products: rice and wheat. The price elasticity of demand of rice is Ed = I0.2| = 0.2 and the price elasticity of demand of wheat is Ed = [1.2| = 1.2 a} What information can we obtain about the preferences of buyers of country 2 from the given price elasticities of demand? Discuss briey. b) Note: the following question Is similar to the example we saw last Saturday (29 September). The government of country 2 needs a signicant amount of fund to tackle the current coronavlrus situation. To obtain the fund, they have decided to impose a S 5 tax on either the sellers of rice or the sellers of wheat. Currently. both the equilibrium prices of wheat and rice are $20 per unit respectively. The equilibrium quantities of wheat and rice are 10,000 units {per day) respectively. As the economic adviser of country 2, what would you advise the government of country 2. Which product should they tax to obtain the fund to tackle the coronayirus situation? Discuss In detail using the Model of Demand and Supply (graphs)

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