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Rebecca's assignment

Rebecca

Rebecca is a first-year Economics student. For her main assignment in the subject, Rebecca had to complete the three questions based on supply and demand.

Assignment topic:

Click to view the assignment topic

  1. Look at the lecturer's expectations of the assignment.
  2. Next read Rebecca's assignment.
    • How well do you think the assignment responds to the topic?
    • Do you think the assignment could be improved in any way?
  3. Now read the lecturer's comments about Rebecca's assignment.
  4. Finally, listen to Rebecca talk about how she wrote her assignment and read feedback about how to overcome the difficulties she faced.

Assignment Questions

Assignment Question 1

This question relates to content and skills covered in Week 2 of the Subject Guide, Chapter 4, Gans, King, Mankiw.

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 explanation.

(a) Analyse the impact on the market for Australian tertiary education of a decrease in the price of tertiary education in the United States.

[10 marks]

b) Analyse the impact on the market for electricity of new regulations requiring the installation of pollution reduction equipment by all electricity producers.

[10 marks]

(c) Analyse the impact on the market for tea of new medical research linking tea drinkers to lower rates of cancer.

[10 marks]

Word Limit 750

Assignment Question 2

This question relates to content and skills covered in Week 3 of the Subject Guide, Chapter 5, Gans, King, Mankiw.

Both illicit and legal drugs are often cited as the classic example of goods which are very price inelastic.

a) Explain why this might be the case.

b) Draw a demand curve illustrating price inelastic demand and explain how the curve relates to the definition of price elasticity of demand.

c) Use the diagram to explain how inelastic demand has implication for pharmaceutical company price setting and revenue.

Word Limit 750

Assignment Question 3

This question relates to content and skills covered in Weeks 4 and 5 of the Subject Guide, Chapters 6,7,8, Gans, King, Mankiw. Chapter 12, Gans, King, Mankiw is not part of the prescribed reading but does provide Australian context, which may be useful to answer part (d) of this question.

Australia's taxation system will change on July 1, 2000 to include a broad based Goods and Services Tax (GST), which will be added to the price of most goods and services purchased by consumers. A hair cut is currently untaxed in Australia.

a) Use a demand and supply diagram to show the impact of the GST on prices and output in the Australian hair cutting industry. (Actual prices and quantities are not required).

b) Identify and explain the areas of consumer surplus, producer surplus and government tax revenue. In doing so, comment on whether the burden of tax falls only on consumers.

c) Use your diagram and the concept of deadweight loss to predict the oveall effect on welfare as a result of the GST on hair cuts.

d) Part of the new tax package is a reduction in income tax rates. Knowing that taxes change economic incentives, explain why the broader based GST tax system may be preferable to the current system of progressive income taxes.

Word Limit 1000

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