QUESTION 3 Consider the musical, Les Miserables, is currently playing at the Lyr

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QUESTION 3 Consider the musical, Les Miserables, is currently playing at the Lyric Theatre in QPAC (Queensland Performing Arts Centre). QPAC knows at the current price, the point elasticity of demand for tickets is 0.18 Select the item from the list provided to make the following statements true 1. Budget 2. 1 3. greater 4. 0.18 5. necessary 6. increase 7. luxury 8. 0 9. decrease 10.time 11. substitute 12. demand Y If the demand for seats were perfectly inelastic, then the value of elasticity along the demand curve would be equal to ' A 1% increase in the price of tickets to see Les Miserables would lead to a demanded % decrease in the quantity of tickets Y Les Miserables is recognised as being a popular and critically acclaimed musical. Some people will pay almost anything for a ticket to go to a performance. Economists would see the ticket purchased by these people as being a good QUESTION 4 Before the State government approves large scale road infrastructure projects (such as toll roads or tunnels) they often try to estimate the demand curve in an attempt to predict the number of cars that will use the infrastructure at different prices. Suppose, before starting work on a new toll road, economic modelling suggested that at a price of $7, the average daily volume of cars using the toll road would be 21,000. Additionally, at a price of $2, the average daily volume of cars using the toll road would be 29,000. It cannot be assumed that the demand curve is linear. Calculate the midpoint price elasticity of demand for the new toll road. Round your answer to the nearest two decimal places, giving a positive value for elasticity

Explanation / Answer

Answer:- (3) (a) If the demand for the seat were perfectly inelastic then the value of elasticity along the demand cureve would be equal to zero.

(b) 1% increase in price leads to less than 1% decrease in the demand as the demand is inelastic.

(c) If some people pay anything for the tickets the Economists would see the tickets purchased by these people as being a "Luxury Good".

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