1. The government has recently embarked on a program to ensure that airlines supply enough seats so that travellers can soon travel interstate. Given the uncertainty associated with future, travel airlines have only agreed to guarantee 620,000 seats for the near future, irrespective of price. The data is summarised in the table below.
   1. Determine the total quantity of tickets demanded and supplied at each price. Briefly explain how you arrived as these quantities.

Price of airline ticket	Demand: Customer Segment 1 (,000s)	Demand: Customer Segment 2 (,000s)	Total Market Demand (,000s)	Quantity of seats Available: (,000s)
$200	240	160
$180	260	180
$160	280	200
$140	300	220
$120	320	240
$110	360	260
$100	380	300
$90	400	320
$00	420	340

Required

[1+1=2 marks]

1. What is the price and quantity of tickets demanded by the total market at market equilibrium?

[1 mark]

1. Which customer segment is more likely to travel irrespective of price? Explain your answer.

[2 marks]

1. How would you describe the shape of the supply curve? Explain what would happen to the equilibrium market price if the quantity of available seats decreased by 5%.

[1+2=3 marks]

1. At market equilibrium, describe the price elasticity of demand for the total market associated with a one dollar increase in the price of a ticket (No calculation is necessary as part of your response). What does this elasticity imply about a change in total revenue resulting from the price change?

[3+2=5 marks]

1. For each of the following scenarios identify whether you would expect:

• An increase in the quantity of second-hand cars demanded,
• An increase in second-hand car demand,
• A decease in the quantity of second-hand cars demanded, OR
• A decrease in second-hand car demand.

1. Second-hand cars and petrol are complements, and the price of petrol increases.
2. The price of second-hand cars increases.
3. Second-hand cars are an inferior good, and incomes decrease.
4. Train tickets and second-hand cars are substitutes, and the price of train tickets falls.

[1+1+1+1=4 marks]

1. The figure below illustrates the market for internet access in the remote areas of Western Australia.
   1. Without any government intervention, what is the equilibrium price and quantity demanded in this market? [2 marks]

Demand for Remote Internet Access Supply Demand 400 380 340 350 310 300 270 250 250 210 200 Price ($ per year) 200 160 150 130 130 110 100 105 100 85 70 50 0 1000 1200 1400 1600 1800 2000 2200 2400 Quantity (Number of Services)