The market for apples at the farmers' market on McGill campus is served by many small producers, of approximately the same size, who produce and sell the same variety of Macintosh apples. It costs each producer 50 cents to produce and sell 1 kg of apples.

If apples were given away for free, 100 kg would be sold each day on campus and any price above 2$ would result in zero sales.

2. Knowing that demand can be represented by a function of the form P(Q) = a bQ, find a (the intercept) and b (the slope) and represent the demand for apples on a graph. (2 pts)

3. How many kg of apples are sold each day at the farmers' market and at which price? (1 pt)

4. Is this outcome efficient? Explain. (2 pts)

5. How many kg of apples would be left unsold if the price increased by 10%? Is demand elastic at this price? (2 pts) 6. Do you expect revenues to increase if the price increased by 10%? Explain. (1 pt)