Using a series of data collected quarterly (20 years), XYZ University has modelled the demand and supply function of their program offering as below:

Qd = 16,000 - 4000P

Qs = -9,000 + 6000P

Note: P is fees (,000) per subject

a. As a newly appointed economist at XYZ University, you are requested to analyze the market and to provide recommendation to the top management:

i. Using the demand and supply function above, plot the graph.

ii. Solve for the equilibrium price (fees) and number of students to be offered a place at the university (make sure that you have quoted the correct fee)

iii. Compute the revenue

b. At the current equilibrium fees, the government believes that poor people deprive of a good education, and hence, enforce that the university should only charge the fees at RM 2,000 per subject.

i. Based on the above scenario, plot the graph to show the new interactions.

ii. How much is the revenue?

iii. Has the revenue increased or dropped after the intervention and by how much?

iv. What will happen to the market efficiency after the intervention (consumer surplus, producer surplus and deadweight loss)?

a. Who loses and who gains?

v. Do you think it is a good for the government to intervene? Provide THREE (3) evidences to support your answer.

c. In another scenario, with the limited number of academics in XYZ University, the top management restricts the number of student intake to only 5,000 students.

i. How much should the university charge?

ii. How much is the university's revenue?

iii. What will happen to the market efficiency due to the restriction (consumer surplus, producer surplus and deadweight loss)?