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Given the demand and supply functions for Chelsea jersey in a Ghanaian market, respectively, as: Qd = 900 - 10P and P = 15 +
Given the demand and supply functions for Chelsea jersey in a Ghanaian market, respectively, as: Qd = 900 - 10P and P = 15 + 0.05 Qs where Qd is quantity demanded, Qs is quantity supplied and P is price of Chelsea jersey. a) Calculate the equilibrium price (in GH) and equilibrium quantity (in shirts). 3 marks b) Suppose the government deems Chelsea jersey as essential to the wellbeing of Ghanaian Chelsea fans and decides to grant a specific subsidy of GH15.00 per shirt, derive the new equilibrium price and quantity. 5 marks c) Graphically indicate the how much of the subsidy would be enjoyed by the producer and consumer, respectively. 3 marks d) Based on your solution to (c), infer from or calculate the elasticity of this commodity. 3 marks e) How much revenue does the government loss? 3 marks f) Briefly explain any three determinants of supply of Chelsea jerseys. 3 marks
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