Question 1 (20 marks) The market for a particular product is characterized by the following demand and supply functions where Q represents the quantity in units of 100 and the prices are in dollars. {a) (b) (c) (d) (e) () (8) (h) (i) P, = 60 2% P.= Q% +90 + 30 For Q values ranging from 1 to 10, use EXCEL to plot both functions on one graph. The quantity must be on the horizontal axis. Label the axes and give a title to the graph. [2 marks| Do the supply and demand functions behave as anticipated by demand theory? Explain. |2 marks] Find the market equilibrium price and quantity. [2 marks] Find the price elasticity of demand when the price equal to 42 and interpret it. [2 marks| Based on vour answer to part (d), if price increases by 5% from 42, compute the percentage change in quantity demanded. [2 marks| How much does the quantity demanded actually change (in percentage) when price increases by 5% from 42 and compare your results with part (e). Comment on your results |2 marks) Use the following demand and supply function to answer the below questions. @, = 250 8P 0, = 50 + 4P Government introduces a three dollar per unit tax. Derive the new supply function and the equilibrium price and quantity after the tax. [2 marks] How much the tax revenue the government will raise? Find out the consumers and producers per unit tax burden. | 2 marks] An advisor suggested the government that if they doubled the tax from three dollar per unit to six dollar per unit the government will raise twice as much as tax revenue. Can vou assess the accuracy of this suggestion? Clearly explain your answer. | 4 marks]