Question 1 (a) The demand and supply equations for a product are given as P = 80 - 0.5Q and P = 20 + 0.5Q, respectively, where P is the price in dollars and Q is the quantity. Solve for the market equilibrium price and quantity. If the government imposes a price ceiling at $30, calculate the quantity traded, the consumer surplus and the producer surplus in the market. Support your answers with a suitable market diagram. Appraise whether the market is efficient, compute the deadweight loss (if any) and explain whether this price ceiling benefits the consumers. (15 marks) (b) The table below shows the price of and the quantity demanded for a product: Price ($) 10 8 6 Quantity Demanded 200 600 800 900 Calculate the price elasticity of demand when the price decreases from $10 to $8 and also the price decreases from $6 to $4 using the mid-point method. Classify the product over these two price ranges and compute the changes in total revenue over the price ranges. Based on your answers, explain the relationship between revenue and the price elasticity of demand and discuss how the producer should change prices to earn more revenue. (10 marks)