The questions below relate to the market for pay parties.
a) Sketch a demand and supply diagram to represent the market, indicating the equilibrium
price and quantity. [3 points]
b) Explain what the demand curve is showing and why it slopes downward. [3 points]

c) Discuss what developments might cause the demand curve to shift and show how it would shift. [2 points]
d) Suppose the government starts to enforce the Night Noises Act (a restriction on loud music late at night) as a result of which the parties still go on, but the police now have to be bribed to ignore the breach. Show and describe what effect this will have on the market.

Answer rating: 100% (QA)

The solution ... View the full answer