Q1. Microeconomics: Elasticity, Pricing Strategy and Decision Making Suppose you work as a market analyst and your market research for coffee and orange juice reveals the following data about demand and supply in the U.S. Price elasticity Income elasticity Cross-price Price elasticity of demand of demand elasticity of of supply (PED) (YED] demand (XED) (PES) Coffee 1.0 0.9 -0.4 0 Orange juice 2.1 -2.5 -0.5 1.3 Answer the following questions based on the data above. (a) Is the demand curve for orange juice elastic or inelastic? Elastic (b) Using the income elasticity of demand information, what can you conclude about type of good orange juice is? It is inferior good. (c) What can you conclude about the relationship between coffee and orange juice? They are complementary goods (d) If you increase the price of coffee by 10%, what will be the impact on the sales revenue of coffee? Revenue will decrease (e) If your CEO wants you to come up with a pricing strategy to increase the sales revenue of orange juice, what pricing strategy should you propose? I would the price of orange juice. (f) If the price of coffee goes up by 10%, what will be the impact on the demand for orange juice? It will (Hint: XED = % change in Quantity demanded of good A divided by % change in Price of good B) (g) Draw a graph to show the market for coffee. Make sure you show clearly the shape of the demand curve and the shape of the supply curve of coffee.Q2. Micro and Macroeconomics: Government Policy & Minimum Wage A minimum wage law is often present in the unskilled or low-skilled labor market. The California minimum wage is illustrated in the picture below. CALIFORNIA 66 Hollywood PLEASE POST NEXT TO YOUR ING OR INDUSTRY OCCUPATION ORDER Official Notice Minimum Wage Order and IWC Industry and California Minimum Wage MW-2019 EFFECTIVE DATE Employers with 26 or More Employees" Employers with 25 or Fewer Employees* January 1, 2019 $12.00 $11.00 January 1, 2020 $13.00 $12.00 PREVIOUS YEARS January 1, 2017 $10.50 $10.00 January 1, 2018 $11.00 $10.50 Employees traded at employed by a single qu unlified taxpayer pursuant to Revenue and Location Code section 20620 are treated as employees of that single taxpayer To employers and repres and occupations in the State of California: SUMMARY OF ACTIONS TAKE NOTICE that on April 4, 2016, the Governor of California Signed Ingblytion proved by the California Legislature, Whing the mini m wayi br al industries (50 3, Stats of 2016. Winding section 1182 12 of the California Labor Code ] Pursuant on 1162 13, The Depart arablity, five bel brew mude to the mininu sections of all of the IMG's industry and occ ation orders. This summary must be made available to employees in accordance with the MIC's wage ciders. Copies of the full text of the urwinded wage orders may be obtained by Growing on-line at wow.diz capo MPagg. of by contacting your local Division of Labor Stander 1. APPLICABILITY The provision of Fit Order shall not apply to outside salespersons and individuals who are the parent, spouse, or children of the employer previously contained in this Draw and The Mis's industry and occupation orders. Exceptions and modifications provided by statute or in Section 1, Applicability, and in other sections of the IWC's industry and booupation orders my such provision are 3. MINIMUM WAGES Every employee shall pay to each employee wages not less than those stated in the above table on each effective date. 3. MEALS AND LODGING CREDITS - TABLE When credit for meals or lodging is used to meet part of the employer's m cure wage obligation, the amounts so credited pursuan Than the folowing ent may not be mat (a) Consider the segment "Employers with 26 or More Employees." Draw a chart to show what happened to the minimum wage between 2018 and 2019 and its impact. Explain your results. (b) Explain what will likely happen if the minimum wage is raised by $3.00? Show this impact on your graph. (c) Who benefits and who loses from a minimum wage increase? Explain using your graph.Q3. Microeconomics: Cost of Production, Revenue and Profit Assume the following cost and revenue structure of the following two companies: Air France and Zoom. Air France is a major airline company but has high average cost of production. During the pandemic, travel was restricted globally and demand for air travel by Air France has been very low. Assume the company made a loss. Zoom provides video conferencing and has lower unit cost of production. During the pandemic, people and firms shifted to Zoom and demand for the company's products has boomed. Assume the company has registered a huge profit. Draw two separate charts to illustrate the above situations. Make sure you draw the AC, MC, AR (Demand) and MR curves for each firm. Also, clearly show the profit maximizing or loss minimizing output (Q*) and equilibrium price (P), and label the profit or loss area as PABC. Briefly explain your charts and economic reasoning