PART A

Using the data above:

construct your demand schedule for going to the Moonshine Club. Use prices from 0 to £20.

plot and explain your demand curve for going to the Moonshine Club

demonstrate and comment on the way that your price elasticity of demand changes along the length of your demand curve. (Use price changes of £2.00 when calculating the price elasticity.

PART B

Explain, using relevant graphs, the way that your demand for going to the Moonshine Club might reasonably be expected to change in relation to each of the following:

1. a reduction in the cost of entry to the local cinema (a substitute good) from £8 to £7.50. Assume the change in the number of visits to the Moonshine Club, at any price charged by the Moonshine Club, to be 2.

2. a 10 percent increase in your annual income. Assume a 20 percent change in the number of visits to the Moonshine Club at each price.

PART C

If your demand curve is typical for all consumers would it be better for the Moonshine Club management to raise the cost of entry to £16.00 or to lower the price to £12.00. Explain why the Moonshine Club management should change the price in the direction you have chosen