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QUESTION 2A i. In April 2007, there were shortages of Ghacem cement in the country which led to a rise in the price of Ghacem cement. The government then intended to put a price ceiling on cement in the country to minimize the loss to users of cement for construction purposes. Some people were of the view that "the fixing of a price ceiling for cement in the country will not have any effect". Briefly discuss with the aid of an appropriate diagram the effect of the imposition of price ceiling on Ghacem cement market. (5 Marks) ii. After the imposition of the price ceiling (and initial market equilibrium), two events took place in the cement market. First, Ghacem Company Limited obtained an efficient technology of production which influenced supply of Ghacem cement. This was followed by the second event (after a year) where the prices of raw materials for Ghacem cement production increased. An economist trained in the University of Professional Studies, Accra is of the view that, the final equilibrium price, after the effect of the second event has been felt, can only be lower than the initial equilibrium price (that is when the two events have not occurred). Another economist trained in the University of Ghana, however on the other hand thinks the final equilibrium price can only be higher than the initial equilibrium price. By using appropriate diagram(s) briefly explain who is right. If none of the two economists is right, what is your view? (5 Marks) QUESTION 2B Dalahla Company Limited, focusing on producing tooth paste (in units) has a demand function 4Q =35 - 0.5P. If total fixed cost is GHe 80 and average variable cost per unit function is 3Q - 320 51 + - Q , where Q is number of tooth paste produced and P is the price per tooth paste (in GHe). What is the total profit at the profit maximizing level of output, and what is the best pricing policy option? (5 Marks) QUESTION 2C The manager of Don Teeta Company Limited hires labour (L) and rents capital equipment (K) in a very competitive market. Currently, the wage rate of labour is GHe2 per hour and capital is rented at GHe 5 per hour, the unit price of the product is GHe0.75 and total cost of production is GHe 1,000. Suppose the firm's production function (Q) is as follows: Q = 14K0.50.5 + 10 Determine the optimal input usage and the maximum profit