QUESTION 3 There are several coffee shops at UQ. It is known that a consumer is

Question

QUESTION 3 There are several coffee shops at UQ. It is known that a consumer is more likely to return to a coffee shop that they are already familiar with and have purchased a coffee from before. John has purchased a coffee from Merlo's but not from Darwin's or the Beltop Cafe Select the item from the list provided to make the following statements true John's demand for coffee from Merlo's could be less . more 8 2. budget 3. greater 4. necessary 5. increase 6. luxury 7. inelastic 8. elastic 9. decrease 10. time 11. substitute 12. demand than at Darwin's or the Beltop Cafe 2 With several demand for coffee would be more elastic coffee shops at UQ, John's If John considers coffee to be a necessary good, compared to Sue who is an occasional coffee drinker, then John's demand for coffee would be relatively inelastic. QUESTION 4 Suppose between 2015 and 2016 there were 3,000 car parks available for use at UQ In 2015, the price of a car park was $4 per day and during teaching periods 99% of these parks were taken by 8 am. At the beginning of 2016, the price of a car park was increased to $5 per day and during teaching periods 90% of these parks were taken by 8am. It cannot be assumed that the demand curve is linear. Calculate the midpoint price elasticity of demand for car parks at UQ. Round your answer to the nearest two decimal places, giving a positive value for elasticity 0.43

Explanation / Answer

Question 3 :

1) elastic ( If the demand is less elatic at Merlo then John will purchase from there even if there is a slight change in price . )

2) substitute ( Since there are many very very close substitute coffee shops at UQ , John can purchase coffee from any of them . If the price of one shop rises John can easily shift to another . So the demand for coffee at one particular shop will be more elastic ) .

3) more ( Since it is a necessity for John he will consume coffee whatever be the price but Sue will decrease demand for coffee if price rises ) .

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