Price and Quantity Demanded Assignment | Homework For You
Question 1 (5 marks)
A cinema has identified two groups of customers in the market: students and adults. To gain a concession, students must show their student card when buying a ticket. Each ticket costs the cinema $6 regardless of whether it is to a student or an adult. Use the following two tables to answer each part of the question below:
Adult Buyers
| Price | Quantity Demanded |
| 20 | 0 |
| 18 | 2 |
| 16 | 4 |
| 14 | 6 |
| 12 | 8 |
| 10 | 10 |
| 8 | 12 |
Students – Concession Buyers
| Price | Quantity Demanded |
| 12 | 0 |
| 10 | 1 |
| 8 | 2 |
| 6 | 3 |
| 4 | 4 |
| 2 | 5 |
- a) Can the cinema engage in price discrimination? Explain. (2 marks)
- b) What price will the cinema charge adults to maximize profit? (1.5 marks)
- c) What price will the cinema charge students to maximize profit? (1.5 marks)
Question 2 (5 marks)
Use the following table for this question
| Good | Own Price Elasticity of Demand |
| Cigarettes | -0.40 |
| Alcohol | -1.00 |
| Sugary Drinks | -1.30 |
(a) If the government could raise taxes on one good, which product should the government increase tax rates in order to raise tax revenue? Explain. (1 mark)
(b) Which one of the three products has an elastic demand curve? (1 mark)
(c) If the government wants to decrease the quantity consumed of cigarettes by 10%, what percentage of tax would they have to levy on cigarette consumption? Show your working. (1 mark).
(d) If the government wants to decrease the quantity consumed of alcohol by 30%, what percentage of tax would they have to levy on alcohol consumption? Show your working. (1 mark).
(e) If the government wants to decrease the quantity consumed of sugary drinks by 20%, what percentage of tax would they have to levy on sugary drink consumption? Show your working. (1 mark)
Question 3 (5 marks)
(a) Draw a graph showing a market equilibrium for ice-cream. Fully label and explain the graph. (2 marks)
(b) On your graph from part (a) illustrating the following situation: The weather is suddenly unseasonably hot and at the same time the cost of ice-cream production increases. Explain your graph, and report on your new equilibrium quantity and price. (3 marks)
Question 4 (5 marks)
Discuss the impact of the weak Aussie dollar on Australia’s tourism industry (2.5 marks) and higher education sector (2.5 marks) in recent years. Get Economics homework help today
