i.Explain the price discrimination methods or techniques used by the operators of the Highway.

(3 marks)

ii.Suppose the market demand of CLASS 1 is given by the equation where P is toll rate and Q is the number of class 1 vehicles measured in thousands of vehicles

a.What are the quantity demanded at the new and the old rates respectively?

(4 marks)

b.Using the midpoint method, calculate the price elasticity of demand for class 1 vehicles and interpret your result.

(4 marks)

iii.The managers of highway 2000 attribute the increase in toll rates to an increase in input costs.Illustrate how this change would be represented on a demand and supply diagram. Label the axes, the curves, and all the equilibrium points.

(5 marks)