Elasticity and Perfectly Competitive Markets | Quiz
Added on 2022-09-24
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E C O N 1 0 1 0 – Q U I Z - Elasticity and Perfectly Competitive Markets
Q U E S T I O N 1
1. The Brisbane Entertainment Centre is a performance venue, which hosts popular musicians from
around the world. It has a maximum seating capacity of 13,500 people. In 2015, an artist priced
their performance at a price of $50 per ticket and the show was completely sold out. The next
year the same performer decided to increase the price to $100 per ticket but this time only 12,000
tickets were sold.
1. The point elasticity of demand at a price of $50 is 0.07% (rounded to two decimal places).
2. A 1% increase in the price of a ticket leads to a 0.11% (rounded to two decimal places) decrease
in quantity demanded.
3. A 1% increase in price leads to a 0.07% (rounded to two decimal places) increase in quantity
demanded.
Which of the above statements are true:
Only 1 is true.
Only 2 is true.
Both 1 and 2 are true.
Both 2 and 3 are true.
All three are true.
Q U E S T I O N 2
1. An author has released several popular fantasy novels, in the past, for a recommended retail price
(RRP) of $19.99. The most recent novel sold 5 million copies worldwide. For a new book, the
RRP is increased to $21.99 in an attempt to increase revenue. The new book sells 4.8 million
copies worldwide.
Which of the following statements are true:
The point price elasticity of demand for the author's novel at a price of $19.99 is 0.3998.
The point price elasticity of demand for the author's novel at a price of $19.99 is 39.98.
The point price elasticity of demand for the author's novel at a price of $19.99 is inelastic.
A 1% decrease in the price of the author’s novel when $21.99 will lead to a 33.98%
decrease in the quantity of novels demanded.
Q U E S T I O N 1
1. The Brisbane Entertainment Centre is a performance venue, which hosts popular musicians from
around the world. It has a maximum seating capacity of 13,500 people. In 2015, an artist priced
their performance at a price of $50 per ticket and the show was completely sold out. The next
year the same performer decided to increase the price to $100 per ticket but this time only 12,000
tickets were sold.
1. The point elasticity of demand at a price of $50 is 0.07% (rounded to two decimal places).
2. A 1% increase in the price of a ticket leads to a 0.11% (rounded to two decimal places) decrease
in quantity demanded.
3. A 1% increase in price leads to a 0.07% (rounded to two decimal places) increase in quantity
demanded.
Which of the above statements are true:
Only 1 is true.
Only 2 is true.
Both 1 and 2 are true.
Both 2 and 3 are true.
All three are true.
Q U E S T I O N 2
1. An author has released several popular fantasy novels, in the past, for a recommended retail price
(RRP) of $19.99. The most recent novel sold 5 million copies worldwide. For a new book, the
RRP is increased to $21.99 in an attempt to increase revenue. The new book sells 4.8 million
copies worldwide.
Which of the following statements are true:
The point price elasticity of demand for the author's novel at a price of $19.99 is 0.3998.
The point price elasticity of demand for the author's novel at a price of $19.99 is 39.98.
The point price elasticity of demand for the author's novel at a price of $19.99 is inelastic.
A 1% decrease in the price of the author’s novel when $21.99 will lead to a 33.98%
decrease in the quantity of novels demanded.
Q U E S T I O N 3
1. 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 __________ than at
Darwin's or the Beltop
Cafe.
With several __________
coffee shops at
UQ,John's demand for
coffee would be more
elastic.
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.
1. more
2. budget
3. greater
4. necessa
ry
5. increas
e
6. luxury
7. inelasti
c
8. elastic
9. decreas
e
1
0.
time
1
1.
substit
ute
1
2.
deman
d
Q U E S T I O N 4
1. Suppose between 2015 and 2016 there were 1,500 car parks available for use at UQ.
In 2015, the price of a car park was $2 per hour and during teaching periods 40% of these parks
were taken by 9 am.At the beginning of 2016, the price of a car park was increased to $2.50 per
hour and during teaching periods 39% of these parks were taken by 9am.
Calculate the midpoint price elasticity of demand for the car parks at UQ. Round your answer to
the nearest two decimal places, giving a positive value for elasticity.
8.
2.
1.
1. 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 __________ than at
Darwin's or the Beltop
Cafe.
With several __________
coffee shops at
UQ,John's demand for
coffee would be more
elastic.
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.
1. more
2. budget
3. greater
4. necessa
ry
5. increas
e
6. luxury
7. inelasti
c
8. elastic
9. decreas
e
1
0.
time
1
1.
substit
ute
1
2.
deman
d
Q U E S T I O N 4
1. Suppose between 2015 and 2016 there were 1,500 car parks available for use at UQ.
In 2015, the price of a car park was $2 per hour and during teaching periods 40% of these parks
were taken by 9 am.At the beginning of 2016, the price of a car park was increased to $2.50 per
hour and during teaching periods 39% of these parks were taken by 9am.
Calculate the midpoint price elasticity of demand for the car parks at UQ. Round your answer to
the nearest two decimal places, giving a positive value for elasticity.
8.
2.
1.
Q U E S T I O N 5
1. In the market for alcoholic beverages, a business called Drive-thru Bottle Shop offers a variety of
different bottled wines to their customers. They stock many brands, some being very well-
known, with others less well known.
Answer the following questions:
a. Consider the market for low cost white wines (less than $20) and high cost white wines ($100
and over). Since the high cost wine takes up more of the consumers budget, the point price
elasticity of demand for low cost wine would be than the high cost wine, ceteris
paribus. Type L for Less, M for More or N for No Different.
b. The demand for a particular wine sees customers purchase 20,000 bottles of wine when the price
is $22.99 per bottle, and only 19,500 bottles when the price was increased to $23.49 by the
Drive-thru Bottle Shop management. What is the price elasticity of demand using the mid-point
formula? . Answer to the nearest two decimal places.
c. Assume the Drive-thru Bottle Shop is trying to maximise revenue. Considering your findings in
part b., did the Drive-thru Bottle Shop’s decision to increase the price agree with increasing
revenue? . Type Y for Yes, N for No or U for Unknown.
Q U E S T I O N 6
1. Every year, over 200,000 tourists come from all over the world to visit the Taj Mahal in India.
On any given day outside the Taj Mahal, there are many local vendors selling exactly the same
souvenirs to tourists at the same price.
1. The demand curve of the souvenir market is perfectly elastic.
2. The demand curve of a souvenir vendor is perfectly elastic.
3. The demand curve of the vendor is perfectly inelastic.
Which of the above statements are true:
Only 1 is true.
Only 2 is true.
Both 1 and 2 are true.
Both 2 and 3 are true.
0.11
L
1.18
N
1. In the market for alcoholic beverages, a business called Drive-thru Bottle Shop offers a variety of
different bottled wines to their customers. They stock many brands, some being very well-
known, with others less well known.
Answer the following questions:
a. Consider the market for low cost white wines (less than $20) and high cost white wines ($100
and over). Since the high cost wine takes up more of the consumers budget, the point price
elasticity of demand for low cost wine would be than the high cost wine, ceteris
paribus. Type L for Less, M for More or N for No Different.
b. The demand for a particular wine sees customers purchase 20,000 bottles of wine when the price
is $22.99 per bottle, and only 19,500 bottles when the price was increased to $23.49 by the
Drive-thru Bottle Shop management. What is the price elasticity of demand using the mid-point
formula? . Answer to the nearest two decimal places.
c. Assume the Drive-thru Bottle Shop is trying to maximise revenue. Considering your findings in
part b., did the Drive-thru Bottle Shop’s decision to increase the price agree with increasing
revenue? . Type Y for Yes, N for No or U for Unknown.
Q U E S T I O N 6
1. Every year, over 200,000 tourists come from all over the world to visit the Taj Mahal in India.
On any given day outside the Taj Mahal, there are many local vendors selling exactly the same
souvenirs to tourists at the same price.
1. The demand curve of the souvenir market is perfectly elastic.
2. The demand curve of a souvenir vendor is perfectly elastic.
3. The demand curve of the vendor is perfectly inelastic.
Which of the above statements are true:
Only 1 is true.
Only 2 is true.
Both 1 and 2 are true.
Both 2 and 3 are true.
0.11
L
1.18
N
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