E TI N A MP L RY Question 1 {a} AFB Company Ltd is a company that was set up in June 202i] that produces an alcohol drink known BedRoek Bitters. Among the competitors of your product are Alomo Bitters from Kasapreko Company Ltd. As an expert in the marketing of alcoholic drinks. you have been poached from Kasapreko to oversee the marketing of this new.r product. In order for you to make informed decision and advise the board appropriatelyI you engaged an economist who estimated the demand equation for your rm's product. The economist used data from 35? consumers around the country for the month ofJanuary 2021 to estimate a linear regression for your product; Variable Parameter Estimates Standard error Price of BedRock Bitters per bottle (PI) Price of Alamo Bitters - or bottle (P II Per capita Income {I} Advertising (A) Requared Ad'usted R-squared F-statistic 7.3394 In addition, the economist also estimated the supply function for your product as: Q: = 35 + 5.5!]Jlr 1.5PL + [LOSE where PI is the price of BedRock Bitters per bottle. FL is the per unit price of unskilled labour. and E is litres of Ethanol used. Now suppose 2 bottles of'BedRock Bitters is sold for GHa, a bottle of Alomo Bitters is sold for GH 9240, the per capita income of consumers is GHeED. the company spends GHeltlD on advertising. the per unit price of unskilled labour is GHSI1 and a total of llllll] litres of ethanol was used for the production. i. Write down the estimated demand equation for your rm's product. 1 mark ii. Interpret the coefcient of price of BedRock Bitters and Price of Alomo Bitters. I mark iii. Determine the quantity of BedRock Bitters bought by consumers. I mark iv. Estimate the own price elasticity of demand and state the type of demand curve your rm has? 2 marks v. What would be the firm's price policy option? 1 mark vi. Assess the probable impact on your firm if the Kasapreko increases the price of Alamo Bitters by 15%. 2 marks vii. What is the relationship between BedRock Bitters and Alomo Bitters? 1 mark viii) Find the demand and supply curves for BedRock Bitters. 2 marks ix. Determine the equilibrium price and quantity for Bedllock Bitters. 2 marks 1 x. Suppose the government imposes a tax ofHpE on ever}r BedRock Bitters sold. what will be the new equilibrium price and quantity? 2 marks xi. Represent the demand curve. old and new supply curves on a graph and find the deadweight loss. 5 marks