Price elasticity of demand
1. What is the price elasticity of demand for a hotel room if an increase in price of 20% leads to a decrease in demand of 30%?
2. What is the price elasticity of demand for a restaurant if an increase in price of 20% leads to an decrease in demand of 10%
3. Describe six factors which affect the price elasticity of demand for goods and services. Give examples for each.
4. If the income elasticity of demand for a good is -1, what sort of good is it likely to be? Give an example.
5. What do we call a good or service if demand increases when income increases? What range would the income elasticity of demand fall into? Give an example.
6. Give an example of two goods and/or services in the tourism sector which would have negative cross-price elasticity. What are these goods and services called?
7. There are two cafés side by side in Broadbeach Mall. Café A lowers its price for a standard coffee from $4 to $3. What would happen to the quantity demand at Café B. What range would you expect the cross-price elasticity to be in?
8. What is the price elasticity of supply for Hinterland Tours if a price increase of 15% leads to the quantity being supplied by the market increasing by 25%?
9. Describe four factors that affect the price elasticity of supply of goods and services. Give examples.