Assignment Questions

Assignment Question 1
This question relates to content and skills covered in Week 2 of the Subject Guide, Chapter
Use the four steps from Week 2 of the Subject Guide to answer the following questions.
Draw a separate diagram for each event and refer to points on the diagram in your explanati
(a) Analyse the impact on the market for Australian tertiary education of a decrease in the
[10 marks]
b) Analyse the impact on the market for electricity of new regulations requiring the instal
[10 marks]
(c) Analyse the impact on the market for tea of new medical research linking tea drinkers t
[10 marks]
Word Limit 750
Assignment Question 2
This question relates to content and skills covered in Week 3 of the Subject Guide, Chapter
Both illicit and legal drugs are often cited as the classic example of goods which are very
a) Explain why this might be the case.
b) Draw a demand curve illustrating price inelastic demand and explain how the curve relate
c) Use the diagram to explain how inelastic demand has implication for pharmaceutical compa
Word Limit 750
Assignment Question 3
This question relates to content and skills covered in Weeks 4 and 5 of the Subject Guide,
Australia's taxation system will change on July 1, 2000 to include a broad based Goods and
a) Use a demand and supply diagram to show the impact of the GST on prices and output in th
b) Identify and explain the areas of consumer surplus, producer surplus and government tax
c) Use your diagram and the concept of deadweight loss to predict the oveall effect on welf
d) Part of the new tax package is a reduction in income tax rates. Knowing that taxes chang
Assignment topic Question 1
In analysing the three examples I will use the four-step approach outlined in the study boo
Step one, identify which curve (demand or supply) will be affected?
Step two, how will the curve be affected? It will be either a shift of the curve or
Step three, in which direction?
Step four, analyse the adjustment process for both supply and demand.
(a) Analyse the impact on the market for Australian tertiary education of a decrease in the
In analysing the market for Australian tertiary education, the demand curve would be affect
This factor was exogenous, outside the Australian model. The lower price in the United Stat
The new demand curve (D2) now shows that at the old equilibrium price at point Z, the quant
To adjust to the new equilibrium, there must be an adjustment along both the demand and sup
Graph 1: Market for Australian Tertiary Education
(b) Analyse the impact on the market for electricity of new regulations requiring the insta
In analysing the market for electricity I found that the supply curve would be affected bec
It would then shift the supply curve right, or away from the origin, as the supply has incr
To adjust the curves so that they are at equilibrium, both curves will have movements along

Graph 2: Market for Electricity

(c) Analyse the impact on the market for tea of new medical research linking tea drinkers t
In analysing the market for tea the new medicinal characteristics would cause an increase i
The increase in demand would shift the demand curve to the right, a shift away from the ori
The supply curve will have an upward movement along the curve because more will be supplied
Graph 3: Market for Tea
Assignment topic Question 2
Both illicit and legal drugs are often cited as the classic example of goods which are very
(a) Explain why this might be the case.
(b) Draw a demand curve illustrating price inelastic demand and explain how the cur
(c) Use the diagram to explain how inelastic demand has implications for pharmaceut
Elasticity is a measure of the responsiveness of quantity supplied to one of its determinan
Illicit and legal drugs can be classed as both elastic and inelastic products because for s
People become addicted to drugs or need them for medical reasons and therefore they will al
This shows the product is inelastic because it is may be addictive or always demanded for h
Graph 4: Inelastic Demand Curve
The inelastic demand curve is very similar to a straight line, because of the curve's almos
Graph 5: Inelastic Demand Curve
Graph 6: Elastic Demand Curve
By colouring in the difference between the two dots and the vertical and horizontal axis, y
Whereas the other diagram is the elastic demand curve, and it shows the same two points wit
By showing the two diagrams I have attempted to show that the elastic demand curve does not
Inelastic demand products are different from other products on the market. Usually when a p
Inelastic products however are not the same, they do not keep customers because their price
Assignment topic Question 3:
Australia's taxation system will change on July 1 next year to include a broad based Goods
(a) Use a demand and supply diagram to show the impact of the GST on prices and output in t
(b) Identify and explain the areas of consumer surplus, producer surplus and government tax
(c) Use your diagram and the concept of deadweight loss to predict the overall effect on we
(d) Part of the new tax package is a reduction in income tax rates. Knowing that taxes chan
Graph 7: Australian Haircut Industry - Introduction of GST
With the new taxation laws introduced in July there is now going to be taxes on products th
Although the price has increased, the amount that the hairdresser receives has decreased (a
Consumer and producer surplus are both labelled on the diagram. Consumer surplus is found a
Producer surplus is the area from the equilibrium point and down until it hits the horizont
Dead weight loss is another area labelled on the diagram. This is the area where the consum
The new tax package is broad and with the introduction of the higher income taxes it is goi
When the new tax regulations are introduced this may, at the beginning, reduce the demand f
Although there may seem to be a large amount of problems with the new tax laws, they will e