QUESTION 1

A.You have been appointed the new manager for Ghana Airways Company Limited, an international airline company that flies from the Kotoka International Airport in Accra to Heathrow Airport in London every day. The airline is described as a monopolist and has the possibility of discriminating between its Business and Economy Travelers. To help you price your services appropriately to maximize profit, you engaged an economist who estimated the demand function for both Economy and Business

Travelers as:

Q1= 24 - 0.2P1Economy Travelers

Q2= 10 - 0.05P2Business Travelers

Where Q1and Q2are the respective numbersof Economyand BusinessTravelers and P1 and P2 are their respective fares (in GH). If the Total Cost (TC) of this airline company for flying these two categories of travelers is given as TC = 35 + 40Q, where Q = Q1+ Q2

What can you say about the fares, number of travelers and profit of Ghana Airways Company Limited, with and without discrimination?

B.The economy of Ghana is made up of three sectors namely Agriculture, Industry and

Services. These three sectors contribute to the national output. For decades prior to the

2000s, the Agricultural sector contributed the most to the national output. Sadly, in recent years however, the sector has been the least contributor to national output.

Trends in production of major food crops such as maize, rice and sorghum show that on-farm productivity has stagnated and the exploitable difference between the actual and the potential output of most of the crops (yield gap) has widened. Low and

inadequate levels of usage of productivity enhancing technologies such as quality seeds

of improved varieties and fertilizer, thin extension services and weak market linkages contributes to the poor agriculturalperformance. It was against this background that the

NPP-led governmentimplementedone of her flagshipprogrammes "Plantingfor Food and Jobs".

The programmeis primarilyaimed at makingsubsidizedimprovedseeds and fertilizersavailable to farmers, sensitizingfarmers on the adoptionof good agronomicpractices and the marketing of agriculturecrops over an electronicagricultureplatform.Thisprogrammeis ultimatelyaimed at boostingcrop yield.In addition,supposethatagriculturalproductsinGhanaare normalgoods and due to theimplementationof goodeconomicpoliciesand thecurtailingofcorruption,the economy of Ghana grows significantlyleading to appreciable increases in the general consumers' incomelevels.With theaid of a diagram,explainthe effect ofthese eventson theequilibrium price and quantityof agriculturalcrops assumingthat these events have equal impact.

C.The University of Professional Studies, Accra (UPSA) was founded in 1965 as a private professional business education tuition provider. In 1999, by means of the Institute of Professional Studies Act, (Act 566), it became a tertiary institution with the mandate to provide tertiary and professional education in Accountancy, Management and related disciplines. The University has a student population of approximately 12,000. The University now has a state-of-the-art Students'Center where food,snacks and drinksare served to studentsand staff. Nevertheless, a sizeable number of UPSA students patronizeAuntie Ama's (ATM) rice and beans food located at Madina Estate close to the Home Made restaurant. Assume all other restaurants and food jointson campus and at Madina Estate with the exception of ATM food were able to reduce the price of their food. Further, suppose the local municipalauthoritydecides to imposetax on ATM food. With the aid of a diagram, what willbe the effect of these events on the equilibriumprice and quantity of ATM food assumingthe tax has larger impact.