SECTION A (COMPULSORY) Question 1 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 school has a student population of approximately 12,000. The school now have a state-of-the- art Students' Center where food, snacks and drinks are served to students and staff. Nevertheless, a sizeable number of UPSA students patronize Auntie Ama's (ATM) rice and beans food located at Madina Estate close to the Home Made restaurant. In a quest to be able to predict the packs of rice Auntie Ama can sell in a month, she employed an economist to estimate the demand curve for her food. By sampling a total of 28 consumers, the economist estimated the demand function for Auntie Ama's food as (with Standard Errors in Parenthesis): Qy =-175 - 1.5Px + 2.25Py + 0.51 + 0.75A (16.76) (0.53) (1.98) (0.12) (0.45) F-statistics = 56.9 Prob > 0.0000 R-squared = 0.8751 No. of Obs. = 28 Where Q is the demand for Auntie Ama's food, Px is the price per pack of Auntie Ama's food, Py is the price per pack of Home Made food, I is per capita income of UPSA community, and A is the amount of money spent on advertising by Auntie Ama. In addition, the economist also estimated the supply function for Auntie Ama's food as: Qs = -25 + 3.5Px - 1.75PL + 0.25Tx Where Of is the supply for Auntie Ama's food, Px is the price per pack of Auntie Ama's food, PL is the average price of unskilled labor (c per hour), and Tx is the level of technology. Now suppose the equilibrium values of the variables in the demand and supply functions are given as: Px = $18; Py = $20; 1 = $400; A = $20; PL = $10; Tx = 30 a) Identify the significant and insignificant variables at 5% significant level using to.025,26 = 2. 056 5 marks b) Interpret the coefficient of the significant variables. 1 mark c) Determine the quantity of packs of food sold. 1 mark d) Estimate the own price elasticity of demand and state the type of demand curve 1 marks e) Comment on the pricing policy options 1 mark f) Assess the probable impact on your firm if consumers income increase by 8% 2 marks g) Find the demand and supply curves for Auntie Ama's food. 2 mark h) Determine the equilibrium price and quantity for Botch Potato and show the equilibrium graphically. 6 marks i) Examine the welfares of the economic agents. 2 marks