QUESTION 3 (20 MARKS) (a) The daily demand for Carlo m handbags (X) is estimated in linear demand function as follows: CLOl (10 Marks) Q = 100 - 3P); + 4Py 7 0.01M + 2A where, A represent the amount of advertising, PI is the price of good X (Carlo 51%)): P}, is the price of good Y @pnnNiva), and M is average income of population. Suppose good X is sold at RM25 per unit, good Y is sold at RM35, the company utilizes 50 units of advertising, and average consumer income is RM20,000. 1. palculate the price elasticity of demand. Interpret your answers. (4 marks) :ii. Calculate the cross elasticity of demand. Explain your answers. (3 marks) :iii. Calculate the income elasticity of demand. Discuss your answers. (3 marks) (b) The table below shows the weekly relationship between output and number of workers for a factory with a fixed size of plant. CLO2 (6 Marks) Number of Workers Output 0 0 1 50 2 110 3 300 4 450 5 590 6 665 7 700 8 725 9 710 10 705 1. At what point does diminishing returns set in? (2 marks) ii. Illustrate the three stages of production using diagrams. Explain you answers. (4 marks) (c) ABC Fabrication Co, a small manufacturer of sheet-metal body parts for automobile industry estimates its long run production as below: CLO2 (4 Marks) Q = 6L2 -0.4L3 1. Find the average product function. (2 marks) ii. Find the marginal product function. (2 marks)