in crease the price of a Standard drink from $0.80 to $1.10 - resulting in the consumption from 24 standard drinks for every person aged 15 years and over per week to around 20 standard drinks per week.

Use the numbers given above to calculate the price elasticity of demand for a

standard drink in the Northern Territory for the original price increase, showing

your workings. Interpret your answer; does your answer indicate that demand for

a standard drink in the NT is elastic or inelastic? Explain what this means with

respect to the responsiveness of drinkers to price increases, and suggest a reason

(or reasons) for this level of elasticity.

the government then decides to add a price floor of $1.30 on standard drinks.

Will a price floor have a greater or smaller effect on the quantity of standard

drinks consumed in the NT compared to if demand was more elastic than you

found in answer to part (A)? Explain your answer.

Thank heaps